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Generally speaking, the biggest hurdle in financing a business is finding the money to get it started. The next big financial challenge for most businesses is finding an effective way to finance growth.

Growth can come in many different forms such as a new location, a bigger office, more equipment, more capacity, increased inventory, more staff, new products and/or services etc. Further, each business tends to be in a unique financial situation in terms of what different types of funding they can qualify for, which makes matching financing to growth requirements a complicated process.

The Obama administration has come up with a new initiative to help small businesses. Details of this plan can be found here. The goal of this initiative is to increase access to capital through tax breaks on small businesses investments and lending incentives to smaller community banks which should lead to job creation. Here is a break down of the initiative.

To increase small businesses access to loans a $30 billion “Small Business Lending Fund” (SBLF) will be created. Access to this fund will be limited to banks with less then $1 billion in assets as to target smaller community banks that are a staple of small businesses lending. The funds will given to banks with a sliding scale interest rate that gets lower as small business lending is increased compared to previous years. For example, if a bank were to increase their small business lending 10% or more compared to 2009 numbers, the rate they would pay for the SBLF funds would be 1%; if small business lending stayed the level the rate would be 9%.