, Newburyport, MA

Local News

September 16, 2011

Feds infuse local bank with cash for small businesses

AMESBURY — Provident Bank received a hefty chunk of change from Uncle Sam to help fund loans to small businesses.

The Amesbury-based bank got $17 million in capital from the U.S. Treasury's Small Business Lending Fund because of the financial firm's "financial strength and stability," according to an announcement from the Provident.

"Among The Provident Bank's strategic business decisions are expanding its presence in new markets and investing in small business growth," said Charlie Cullen, president and chief executive officer of Provident Bank. "As an independent community bank, we are committed solely to our customers and the community."

The fund was enacted into law as part of the Small Business Jobs Act of 2010. The $30 billion fund provides capital to qualified community banks with assets of less than $10 billion. The community banks in turn lend the money to small businesses.

The rigorous program is different from a plan touted by state treasurer Steve Grossman in the spring.

Grossman was looking for banks to sign up to receive state deposits and in turn use it to lend to small business.

There were strings attached and local bank executives, including Cullen, were lukewarm to the idea.

The difference with the federal money is the type of money the bank is receiving: capital as opposed to deposits that come with restrictions.

"This program is capital we can lend directly out as opposed to depositing money in the bank," said Chuck Withee, Provident executive vice president and the senior lending officer.

"(The program) is pretty flexible. It's really good for the bank and ultimately for the customers."

Provident is one of more than 130 community banks across the country to have received more than $1.8 billion in small business lending funding.

Two other Massachusetts banks received funding: Central Bank of Somerville and Leader Bank of Arlington. Additional funding announcements will be made on a rolling basis in the weeks ahead.

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