Exton-based First Resource Bank (OTCMKTS:FRSB) has pulled off from the Small Business Lending Fund (SBLF) to save a substantial interest outgo. The bank confirmed that it has unloaded the last of its 25% share from the SBLF.
The bank’s CEO Glenn Marshall provided a statement where he said that the funds were withdrawn to make a payment of $1.3 million on Monday, just in time as the interest payment could have jumped to 9% from 1% after the deadline. It came to light that several other banks are quitting the program to avoid a hike in their interest payments.
SBLF, a program run by the U.S. Department of Treasury, came into existence after the enactments of the Small Business Jobs Act of 2010. The program aimed to provide financial support to banks with assets below $10 million so as to promote small business lending. However, banks were required to prove their financial stability in order to apply for the program.
Small business lending grew
As many as 900 banks had applied to participate in the program, but only a third of those applications were accepted by the Treasury. The regulator had doled out funds in excess of $4.3 billion over and above the set ceiling of $30 billion.
It is noteworthy that as much as $2.7 billion of $4.3 billion was directed to help 137 banks under the Troubled Asset Relief Program (TARP). Those banks utilized nearly $2.1 billion to pay off their debts and relieved them from following executive compensation restrictions.
However, First Resource Bank maintains that participation in the program helped it to boost lending to small businesses. Marshall supported the statement with evidence that the bank’s assets grew to $208 million from $99 million while total loans book ticked up to $175 million from $85 million during the participating period. He further added that nearly 90% of those loans belonged to small businesses.