Pathfinder Bank was granted $13 million from the Treasury Department as part of the small business jobs act, according to public records.
“[Pathfinder Bank] received the capital because of our financial strength, our positive relationship with regulators and our positive history with small business lending,” said Pathfinder President Tom Schneider. “The capital comes in preferred stock which has an initial dividend rate of 5 percent that decreases as the bank continues to grow its small business lending portfolio. Pathfinder Bank projects small business loan growth of approximately seven percent per year over the next three years.”
The funds are a welcome addition to Oswego’s small business community, said Mary Vanouse the director of the Oswego’s office of Community Development.
“All projects need capital to make jobs happen…things are really looking up in the economy,” Vanouse said.
The government hopes that by giving community banks more capital to invest, money will be loaned to small businesses. This would make it easier for companies to keep current workers as well as hire new ones. The idea is that by doing all of this, money will be put back into local cities and the economy will begin to stabilize.
“This will leverage capital and create capacity which allows us to grow larger than we would have been able to without it,” Schneider said.
Under the Small Business Jobs Act, the Treasury Department has its own provisions known as the Small Business Lending Fund. This fund is comprised of $30 billion and was given “to smaller community banks with low-cost capital if they go above and beyond 2009 small business-lending levels.
In addition to meeting this requirement, the federal government was seeking to recognize those banks who had a strong past and present.
“The money will be spent in the local economy and the more money that is put into the local economy the more times one dollar circulates in the area. From local banks to local business to local people – it acts as stimulation towards economic expansion,” Schneider said.
Pathfinder currently has eight branches in Oswego and Onondaga counties. It has goals to continue to work with small businesses in the Central New York market.
As far as businesses that will be receiving loans from this capital, Schneider said, “We will be doing business the way we’ve been doing it all along.”
“We will continue to work with businesses new and old, and the loans will be provided to qualified small businesses” Schneider said. “They will be applying for loans and they will have a standard repayment plan. The overall purpose is economic stimulation through small businesses and more access to enhanced lending.”
Because of today’s tough economy it is rare that companies have the surplus funds needed to hire more workers; grant programs can subsidize hiring in a tight job market.
“Lending allows businesses to expand, and expansion entails job creation; our combined efforts will help to preserve and create jobs,” Schneider said.
President Barack Obama signed the Small Business Jobs Act into law. This bill made it possible for community banks across the country to begin applying for a portion of the $30 billion.