Enacted into law as part of the Small Business Jobs Act of 2010 (the Jobs Act), the Small Business Lending Fund (SBLF) is a dedicated investment fund that encourages lending to small businesses by providing capital to qualified community banks and community development loan funds (CDLFs) with assets of less than $10 billion. Through the SBLF, participating Main Street lenders and small businesses can work together to help create jobs and promote economic growth in local communities across the nation. In total, the SBLF provided more than $4 billion to 332 community banks and CDLFs. Since these institutions leverage their capital, the SBLF could help increase lending to small businesses in an amount that is multiples of the total capital provided. How the Small Business Lending Fund Works The SBLF encourages lending to small businesses (certain business loans2 that are $10 million or less in amount to businesses with $50 million or less in revenue) by providing capital to community banks and CDLFs with less than $10 billion in assets. For community banks, the SBLF is structured to encourage small business lending through a dividend or interest rate incentive structure. The initial rate payable on SBLF capital is, at most, five percent,3 and the rate falls to one percent if a bank’s small business lending increases by ten percent or more. Banks that increase their lending by less than ten percent pay rates between two percent and four percent. If a bank’s lending does not increase in the first two years, however, the rate increases to seven percent, and after 4.5 years total, the rate for all banks increases to nine percent (if the bank has not already repaid the SBLF funding). For CDLFs, the SBLF is structured to encourage small business lending through access to low-cost capital. These non-profit loan funds play a critical role in distressed communities across the country that lack access to mainstream financial services. CDLFs engage in activities ranging from offering microloans to entrepreneurs, providing mezzanine debt to growing small businesses, and financing community facilities like charter schools and health clinics.