Low participation blights Small Business Lending Fund

In his analysis of the Small Business Lending Fund program, which ended last month, U.S. Treasury Secretary Timothy Geithner said he had seen success despite low participation, according to Bloomberg Businessweek.

A total of $4 billion of the $30 billion allotted to the program was disbursed to 332 community banks across the nation - more than one-third of the 933 who applied.

Geithner told members of the Senate Small Business and Entrepreneurship Committee that legal constraints, the long approval process and a lack of qualified applications were to blame for the low figures. He focused on the benefits the program had for successful applicants.

"For every bank that got capital in this program, they have more capacity to lend than they otherwise would have," he said, as quoted by the news source.

The efficacy of the program was recently called into question when The Wall Street Journal reported that more than $2 billion of the funds went toward repaying bailout funds received under the Troubled Asset Relief Program.

"It was basically a bailout for 100-plus banks," Giovanni Coratolo, vice president of small-business policy at the U.S. Chamber of Commerce, told the news source. "It was very ineffective in getting funds out to small business."