In an effort to stimulate the job economy and spending, the US government is giving six small business oriented banks $123 million to help fund small businesses. The Small Business Lending Fund was initialized by Presidents Barack Obama nearly two years ago, but it has taken lawmakers several months to agree on the terms of the program. More than $11 billion has been earmarked for the program, with a staggering 925 lending institutions applying for the fund. Although the banks will eventually have to repay the money that they receive, they will be eligible for a 1% repayment program.

The fund is aimed to help small and mid sized business owners to get loans that they would not otherwise qualify for. Since the credit market began to shrink in 2008, traditional banks are much more strict about their lending criteria. Basically, new companies and small business that don’t already have large existing lines of credit. These type of restrictions have made it difficult for entrepreneurs to launch the businesses that will help to stimulate the economy.

Banks that receive money under the Small Business Lending Fund will be required to lend out the majority of grants that they receive. Some money can be allocated towards operating expenses, but President Obama was diligent in ensuring that lenders would not be able to retain a large portion of their funding. This is only the first phase of the Small Business Lending Fund, and lawmakers will be watching to see what the results are before initiating the second phase.