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May 16, 2011 |
Treasury's Small Business Lending Fund Announces Process for S-Corps and MutualsThe U.S. Department of Treasury ("Treasury") recently published application forms and term sheets for Subchapter S corporations ("S corporations") and mutual institutions interested in participating in the Small Business Lending Fund ("SBLF"). The SBLF provides opportunities for financial institutions to increase profitability while also stimulating local economic growth by increasing lending to small businesses. Although both the application date and the terms of funding for S corporations and mutual institutions differ from those for Subchapter C corporations ("C corporations"), the incentives for participation are similar for all financial institutions.Through SBLF, participating S corporations and mutual institutions may issue senior securities, eligible for inclusion in the institution's Tier 2 capital, to Treasury. Treasury encourages small business lending by reducing the interest rates payable on these securities as an institution's small business lending increases. These interest rates are equivalent to the dividend rates paid by C corporations participating in the SBLF. Significantly, financial institutions may use the SBLF to refinance outstanding Capital Purchase Program investments under the Troubled Asset Relief Program and Community Development Capital Initiative securities. In order to be eligible for participation, S corporations and mutual institutions must have assets of $10 billion or less and must not be on the FDIC problem list. Eligible institutions must engage in small business lending and be dedicated to increasing that lending as demonstrated in a Small Business Lending Plan that must be submitted as part of the application process. Although May 16, 2011 is the application deadline for C corporations interested in participating in the Small Business Lending Fund, S corporations and mutual institutions can continue to apply to the SBLF through June 6, 2011. Application forms, detailed term sheets, and SBLF guidance for S corporations and mutual institutions are available at Treasury's SBLF Resource Center. ABOUT SCHIFF HARDIN LLPSchiff Hardin LLP provides services to banks, savings associations and other types of financial institutions nationwide and internationally. In addition to our traditional strengths in restructuring, recapitalizations, mergers and acquisitions, securities and financings, bank regulatory compliance, and trust department counseling, we have a particular and increasing focus on corporate governance and fiduciary litigation. Our Finance Group also supports our financial institutions clients in all aspects of their credit and lending businesses, and our Securities and Futures Regulation Group assists them in their securities, investment management and commodities-related businesses. We represent some of the largest banking organizations in the United States and overseas, and many community banks and thrifts. For more information, contact us. |