Phoenix-based Western Alliance Bancorporation said it has received $141 million from the Treasury Department to stimulate small-business lending in Arizona and neighboring states as a way to jump-start job creation.
The money comes from the Treasury’s Small Business Lending Fund, which was created by the federal Small Business Jobs Act of 2010 to boost lending by community banks.
Western Alliance got a larger commitment from the fund than any other community bank in the country, and the money could play a key role in meeting the credit needs of small businesses, said Robert Sarver, the company’s chairman and CEO.
Western Alliance primarily operates in Arizona, Nevada and California, and the firm’s small-business lending will focus on those states, Sarver said.
In return for the funding, Western Alliance issued preferred stock to the Treasury and will pay dividends starting at 5 percent.
That rate could drop if Western Alliance exceeds lending goals, or it could rise if the company extends relatively little new credit.
Interest rates on the small-business loans offered by Western Alliance likely will hover between roughly 4 percent and 6 percent, based on the type of loans, their maturity, whether the loans are fixed or floating rate and other factors.
Loans will be targeted to small-business borrowers with under $50 million in annual revenue.
Loan applications should include details on a company’s management, track record, financial statements, business model and cash-flow projections, Sarver said.
Western Alliance will be allowed to lend up to 10 times the $141 million it received from the Treasury, meaning total lending could climb as high as $1.41 billion, Sarver said.
Western Alliance has been ramping up its small-business lending activity, with the company extending $463 million in net new loans over the three years ending June 2011.
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