News Release

New Jersey Department of
Banking and Insurance

Commissioner Tom Considine

For Immediate Release:
April 21, 2011

For Further Information:
Ed Rogan or Marshall McKnight (609) 292-5064

TRENTON – New Jersey Department of Banking and Insurance (DOBI) Commissioner Tom Considine today reminded New Jersey banks that the U.S. Department of the Treasury has extended the deadline to apply for funding from the federal Small Business Lending Fund (SBLF) to May 16. The previous deadline was March 31.

Commissioner Considine also noted that to date, 16 state-chartered banks have already applied for a total of $165 million from the SBLF, which is making $30 billion available nationally to small banks and encouraging loans to small businesses.

“For banks that either missed the original deadline or were undecided as to whether they wanted to participate, this is another opportunity to apply,” said Commissioner Considine. “The goal of the SBLF is to grow the economy by providing capital to community banks and encouraging them to lend to small businesses. Those loans enable small businesses to create jobs.

“I’m not by any means suggesting that all banks should apply, but for those community banks looking for capital to make small business loans in their communities, this is an opportunity worth consideration.”

The SBLF provides capital to qualified community banks with assets of less than $10 billion, which typically devote the highest percentage of their lending to small businesses in their communities.

Community banks have the opportunity to use this capital with business strategies and operating goals designed to address the needs of small businesses in New Jersey.

In the application process, state-chartered banks provide DOBI with their Small Business Lending Plan, which details their plans for making loans to small businesses in the New Jersey marketplace. DOBI provides requested information to the United States Treasury based on the lending plan and the overall financial status of the bank and the Treasury makes the funding decision.  

The Treasury Department will provide banks with capital by purchasing preferred stock in each bank, and the banks will repay the loans to the Treasury through dividends. Preferred stock is generally stock whose holders are the first to receive dividends from available profit. Preferred stock is redeemed before common stock when a company is liquidated.

The dividend rate attached to the SBLF funding will be reduced as the bank’s small business lending increases. If a bank’s small business lending increases by 10 percent or more over the calculated baseline, then the dividend rate will fall to as low as one percent. 

For more information on the program, including how to apply go to: www.treasury.gov/SBL