The U.S. House has passed the Small Business Lending Fund Act (SBLF). So will the bill pass in the Senate? And would passage really result in more loans for small businesses?

The legislation, H.R. 5297, is designed to provide an incentive for community banks to increase small-business lending. Banks that meet the qualifications would get access to a $30 billion fund for loans to small businesses. Participating banks would submit a plan for how they’d use the money to extend credit to businesses in the community.

A couple of hitches:

• The bill faces a rough ride in the Senate. Some senators, already in trouble with constituents over votes in favor of the TARP bill, are worried that a “yes” vote for SBLF will brand them as supporters of “another bank bailout.”
• The bill doesn’t require banks to lend to small businesses in order to access the funds; it only creates incentives for such lending and requires banks to submit plans.

Proponents of the bill say passage will result in $300 billion in new credit and lending to entrepreneurs. The Congressional Budget Office estimates that repayment of loans under the bill would bring in a profit of $1.1 billion to taxpayers.