WASHINGTON, D.C. (AP)–In an effort to loosen loans for small businesses, Mississippi could get up to $13.2 million from a newly created $30 billion fund, the U.S. Treasury Department said Friday.
The fund is part of a bill to aid small businesses and encourage hiring signed by President Obama on Sept. 27.
Under the new State Small Business Credit Initiative, states can apply for funds for programs that encourage private lenders – primarily community banks – to extend credit to small businesses. State have to demonstrate that each dollar in federal funds will translate into $10 of new private lending.
At full capacity, Mississippi’s share would translate into $131.7 million in new lending, the Treasury Department said. The agency will have to approve any plan filed by the state.
Neighboring Louisiana is eligible for the same amount of funding.
The Treasury Department doled out the allocations on a formula based upon each state’s unemployment rate and the decline in jobs.
Besides creating the fund, the law includes about $12 billion in tax breaks for small businesses that take effect Monday. For example, one provision increases to $500,000 the amount of investments businesses would be allowed to write off this year and next.
The law also expands current loan programs handled by the federal Small Business Administration.
Obama pushed the bill hard, saying small businesses are creating most of the jobs in the lagging economy.
Passage of the bill was delayed by months by Republicans in the Senate with many critics comparing the loan fund to the 2008 financial industry bailout and saying it would encourage loans to high-risk borrowers.
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