White House to give $55.4M to state to help small businesses

In its latest attempt to entice small businesses to expand and hire, the Obama administration announced Friday that it will distribute $1.5 billion to the states, which they could then use to lend to businesses.

New York's share will be $55.4 million, and economic development officials said they'll funnel most of the money into two programs.

"It's to increase access to credit for small businesses, particularly women-owned and minority-owned businesses," said Steve Cohen, a deputy commissioner for Empire State Development, the state's economic development agency.

The first program will be to support a fund that covers failed business loans, Cohen said. Financial institutions apply to have access to the fund, enabling them to make business loans safely that might otherwise have been too risky, Cohen said.

"This is a great benefit for the state," he said. "It could unlock small-business lending activity."

The other possibility is that the state could allow other community lenders access to capital, on the condition they make the money available to small businesses. But Cohen said it was unclear how flexible the Treasury Department would allow the state to be.

"We don't know the extent of what's possible because Treasury hasn't released their guidelines," Cohen said, adding he hopes to discuss the issue next week.

Treasury officials did not respond to several requests Friday for comment.

The $1.5 billion is part of the Small Business Jobs Act that President Barack Obama signed into law last week. That bill made it easier for community banks and credit unions to make Small Business Administration loans.