The government is so sure we need small businesses to grow our economy that Congress approved a $30 billion Small Business Lending Fund in December of last year. Yet here it is 6 months later, and not a single dime of that money has been distributed. Treasury Secretary Timothy Geithner addressed this very issue during testimony yesterday in front of the House of Representatives Small Business Committee.

Heres how the program should work.

Banks apply to the Small Business Lending Fund, requesting loans for which they will pay interest ranging from 1 to 5 percent. The more money these qualifying banks lend to small businesses, the lower the interest rate. So far, the program has received 869 applications from banks hoping to participate, asking for captial totalling $11.6 billion.

So whats the hold up?

Geithner attributes the wait to bank regulators hypersensitivity (my word, not Geithners) to being careful with the taxpayers money. Evidentally, regulators want to be sure theyre not loaning money to banks that arent viable. We cant justify helping to keep them alive, says Geithner.

But wouldnt you think with unemployment still above 9 percent that swiftly and effectively approving applications to the Small Business Lending Fund would be priority number one? Not only do small businesses need loans to buy new equipment, but also to (hello!) hire new workers.

All of that said, whats even more interesting to me than the delay of fund distribution (shocker, the government isnt getting things done) is that the applications received are requesting capital that totals just one-third of whats available 11.6 of the $30 billion. Why arent banks applying for more?

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