WASHINGTON, DC— Alarmed by the slow implementation of a bill passed last year by Congress to provide access to capital in order to grow and create jobs, U.S. Senator Bob Casey (D-PA) today raised his concerns with Treasury Secretary Timothy Geithner. Senator Casey also called for better communication between Treasury and local banks. He raised the specific example of poor communication between Treasury and Harrisburg’s Centric Bank.
“I believe the Small Business Lending Fund has great potential to leverage lending and private investment for our Nation’s small businesses,” Senator Casey wrote. “I am concerned, however, that nearly eight months after enacting this bill into law, no funding announcements have been made.”
“During my travels around my home state of Pennsylvania, I have repeatedly heard from constituents about their frustration with the slow implementation process,” he continued. “Some of my constituents are starting to lose faith that funding announcements will, in fact, be made.”
The Small Business Jobs and Credit Act (P.L. 111-240) is designed to help small businesses navigate the economic downturn. The Small Business Lending Fund (SBLF) created by the Small Business Jobs and Credit Act is a $30 billion lending fund, which is intended to provide working capital to small banks. It is estimated that community banks would be able to use this fund to leverage up to $300 billion in loans to small businesses. The fund will not increase the deficit but is estimated to return over $1.1 billion over ten years to the Treasury. The Small Business Jobs and Credit Act was signed into law in September 2010. Pennsylvania’s small businesses employ nearly 2 million people.
A copy of the letter is below:
May 26, 2011
Dear Secretary Geithner:
I write today to express my concerns about the implementation of the Small Business Jobs and Credit Act (P.L 111-240) and specifically the Small Business Lending Fund (SBLF). I believe the SBLF has great potential to leverage lending and private investment for our Nation’s small businesses. I am concerned, however, that nearly eight months after enacting this bill into law, no funding announcements have been made.
During my travels around my home state of Pennsylvania, I have repeatedly heard from constituents about their frustration with the slow implementation process. Some of my constituents are starting to lose faith that funding announcements will, in fact, be made.
While I understand the administrative challenges it took to establish this program, it is simply unacceptable that applicants are left with a lack of information regarding the review process and that eight months into this process we are still waiting for the first round of funding announcements. I have been informed that applicants to the SBLF have experienced great difficulty in their attempt to gather information about the status of their applications and the review process.
Centric Bank, located in Harrisburg, Pennsylvania, sent its application to the SBLF at the end of January. After seven weeks had passed, the CEO and CFO of Centric Bank attempted to contact Treasury via the phone number provided on the SBLF application and guidelines to confirm that their application was received and to ask when the applications would be processed. Over a period of four to five weeks, they left approximately fifteen voice messages and did not receive a return phone call from Treasury. Centric Bank did not receive any replies to their questions until their Members of Congress intervened. At that point, Centric Bank was informed that its application had been received but was not given any details regarding the review process. This lack of response troubles me. While I recognize that Treasury may not be in the position to provide updates on the status of individual applications, I believe the lack of communication from Treasury has caused bankers to question the legitimacy of the SBLF program.
I respectfully request that you direct appropriate resources to developing a stronger communication strategy with applicants. Banks’ inquiries should be responded to within a reasonable amount of time and a detailed explanation of the review process should be available to applicants.
Thank you for your consideration of my views. As the economy continues its recovery, we must be diligent in our efforts to strengthen small businesses.
Robert P. Casey, Jr.
United States Senator