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Overview for Subchapter S Corporations and Mutual Institutions

Subchapter S corporations and mutual institutions participating in the Small Business Lending Fund will benefit from the incentives the Fund provides for increased lending. The more an institution increases its small business lending, the lower the rate it will receive. The application deadline for Subchapter S corporations and mutual institutions is June 6, 2011. Applications should be submitted to SBLFApps@treasury.gov. For questions specific to your institution, please email SBLFInstitutions@treasury.gov. For general questions, please call the information line at 888-832-1147.

Summary of Terms for Subchapter S Corporation Senior Securities
Summary of Terms for Mutual Institution Senior Securities

How SBLF Works for Subchapter S Corporations and Mutual Institutions

Qualifying Subchapter S corporations and mutual institutions may issue senior securities to Treasury through SBLF. The senior securities are unsecured subordinated debentures eligible for inclusion in an institution’s Tier 2 capital. The interest rate payable on the senior securities will be reduced as the participating institution increases its lending to small businesses. The interest rates payable on the Senior Securities have been adjusted to reflect after-tax effective rates equivalent to the dividend rate paid by other classes of institutions participating in the Fund through the issuance of preferred stock. For institutions that are tax-exempt, the interest rate paid will be established equivalent to the dividend rate paid by such other institutions.

The terms of the funding for Subchapter S corporations and mutual institutions are detailed here:

The application deadline for Subchapter S corporations and mutual institutions is June 6, 2011.

Qualified Small Business Lending

The Small Business Jobs Act defines small business lending as certain loans of up to $10 million to businesses with up to $50 million in annual revenues.  Those loans include:

  • Commercial and industrial loans
  • Owner-occupied nonfarm, nonresidential real estate loans
  • Loans to finance agricultural production and other loans to farmers
  • Loans secured by farmland

Eligibility

Your institution is eligible if it has assets of $10 billion or less and it meets the other requirements for participation.  If your institution is controlled by a holding company, the combined assets of the holding company determine eligibility and your holding company must apply.
 
If your institution has total assets of $1 billion or less, it may apply for SBLF funding that equals up to 5% of its risk-weighted assets.  If your institution has assets of more than $1 billion, but less than $10 billion, it may apply for SBLF funding that equals up to 3% of its risk-weighted assets.
  
Restrictions

An institution is not eligible if it is on the FDIC problem bank list (or similar list) or has been removed from that list in the previous 90 days.  Generally, this will include any bank with a CAMELS rating of 4 or 5.
 
An institution seeking to refinance CPP or CDCI securities through SBLF must be current on its dividend payments to the Treasury, cannot have previously missed more than one dividend or interest payment, and must fully refinance or repay its CPP or CDCI securities.  For more information, please refer to the appropriate term sheet for your institution.

Repayments

With the approval of your institution’s regulator, your institution may exit the Small Business Lending Fund at any time simply by repaying the funding provided along with any accrued dividends.  If your institution wishes to repay its SBLF funding in partial payments, each partial payment must be at least 25% of the original funding amount.

Resources for Subchapter S Corporation Banks and Mutual Institutions

Last Updated: 8/19/2011 2:46 PM