Lynnwood bank gets millions from Fed to help small businesses
U & I Financial Corp, a small community bank in Lynnwood, is one of the first in the nation to get access to special funds from the Small Business Lending Fund – a federal program created to get cash flowing into the hands of small business owners.
The bank is getting $5.5 million from the program .
Peter Park, Chief Financial Officer of U & I, says the bank gives about a hundred small business loans to business owners in south Snohomish County and King County each year. Each loan is for about $300,000. Now with the money from the U.S. Treasaury, U & I plans to grow its small business lending by 10 percent.
Impact on local economy?
Parker said it will help create a lot more mom-and-pop shops and family-run businesses.
"Basically you'll be seeing more hotel, motels, gas stations, grocery stores and dry cleaners. All local small business owned by local people," he said.
The Small Business Lending Fund – which has a total of $30 billion to invest in community banks – is the centerpiece of the Obama Administration's Small Business Jobs Act passed last September to help small business owners who face disproportionate challenges accessing capital.
Senator Maria Cantwell, a member of the Senate Small Business and Finance committees, played a lead role in passing the law.
"We know that if we can help Main Street they’ll create jobs and help our economy. They are one of the biggest job creators in America," Cantwell said.
A slow start
The program has been criticized for being slow to kick into action. It’s been 10 months since it passed, and this is the first disbursement of funds. Something that has frustrated Senator Cantwell.
"If it had been implemented a year ago and the money was out to banks like the one in Lynnwood, maybe our economy would be better by now."
The clock is ticking for the Treasury. It has until September 27th to distribute the remainder of the funds. So far, more than 900 small banks have applied for about $12 billion from the fund.
More funding announcements are expected in the weeks ahead.