House set to vote this week on small business loan fund

The U.S. House of Representatives will soon vote on a small business loan fund proposed by President Barack Obama earlier this year to promote job growth and new business formation.

The Hill reports that the bill’s backers believe the $30-billion dollar investment could generate as much as $300 billion in small business loans. Massachusetts Representative Barney Frank, who sponsored the bill, says if it works, the program will pay for itself. As small businesses that get funding repay the loan, banks are then able to repay the government.

The proposed bill also gives an additional $2 billion to state programs that promote small business lending.

Dow Jones Newswires reports the Treasury Department would initially collect interest or dividends in exchange for the funds, but could benefit from reduced rates depending on how much they increase small business lending.

The program is separate from the unpopular Troubled Asset Relief Program, though some Republicans have continued to compare the two. Republicans have also criticized the bill for potentially adding to the budget deficit.