In a conference call with reporters, U.S. Treasury Secretary Timothy Geithner emphasized his commitment to creating "strong positive incentives to lend in support of growing businesses."

Reuters reported that Geithner offered details on how the $30 billion of repaid bank bailout funds diverted to smaller banks would be distributed. "The more loans these banks make to these business customers," said Geithner, "the better deal they are going to get."

If the plan is approved by congress, banks would pay a five percent dividend on government capital received from the Small Business Lending Fund. The dividend rate would decrease by one percent for every 2.5 percent increase in incremental business lending over a two-year period. Banks could be entitled to funds equivalent to 3 to 5 percent of their risk-weighted assets under the program.

The program also would allow banks that retain Troubled Asset Relief Program funds but with less than $10 billion in assets to transfer that capital to the new program.

Treasury officials are instituting these provisions to try to eliminate the stigma that caused many small banks to reject the TARP funds - a major barrier to banks accepting the funds in early 2009, Reuters reported. They also hope to use it to persuade banks who have taken the funds to put it to quick and widespread use.

According to Reuters, the Independent Community Bankers Association said it was "strongly supportive" of the proposal. Small Business Administration administrator Karen Mills told the Associated Press said that "closing the credit gap for small businesses" would be a "big piece of the puzzle" in economic recovery.