Nearly nine months after its establishment, the $30 billion Small Business Lending Fund (SBLF), designed to boost small-business lending, has yet to disburse a single dollar, leaving many wondering if it can live up to its promise amidst persistent unemployment challenges.

Rep. Sam Graves (R-Mo.), chairman of the Small Business Committee, has called Treasury Secretary Timothy Geithner to testify in hopes of uncovering the reasons behind the delay. “This isn’t a witch hunt,” Graves said. “We’re just trying to figure out why the fund isn’t performing as advertised.”

The SBLF was created under the 2010 Small Business Jobs Act to free up capital for banks, enabling them to extend more loans to small businesses for equipment purchases and job creation. As of this week, 844 banks have applied for $11.6 billion in funds. Yet, delays caused by extensive vetting and coordination with regulators have slowed disbursement. A Treasury official noted that while progress has been slow, funds are expected to be released shortly. The department has until September, the program’s first anniversary, to distribute the money.

The prolonged rollout has fueled skepticism about the program’s ability to deliver on its job creation promises. Critics, including Sen. Olympia Snowe (R-Maine), warn that banks might use the fund to refinance costlier loans from the Troubled Asset Relief Program (TARP) rather than issuing new small-business loans. “These institutions would essentially be paying off one taxpayer-funded credit card with another,” Snowe cautioned.

The need for small-business loans remains critical. Banks drastically curtailed lending during the recession, and government-backed loans became a crucial resource for entrepreneurs. Programs like the Small Business Administration’s (SBA) 7(a) loan guarantee, which raised the borrowing cap to $5 million, provided much-needed support. Since October, the SBA has approved 1,137 loans over $2 million, supporting 261,570 jobs.

While the SBA expects to meet its goal of $17.5 billion in lending this fiscal year, industry leaders argue that more needs to be done. Steve Caldeira, president of the International Franchise Association, says small businesses still face a $2 billion credit shortfall, which could fund 82,334 additional jobs.

“Regulatory hurdles are a significant barrier to lending,” Caldeira said, urging Congress to review restrictive policies. Graves echoed these sentiments, calling for measures to ease capital requirements on banks. “We’ve got to untie the hands of these lending institutions,” he said.

Treasury has taken steps to address complaints and streamline the process. Banks participating in the SBLF can borrow at a 5% interest rate, which could drop to as low as 1% if they increase small-business lending by 10%. However, those that fail to expand lending face penalties, with interest rates rising to 7%.

James Ballentine of the American Bankers Association acknowledged the challenges of implementing new programs but noted that delays have been longer than expected. “When you speak with Treasury, they say it’ll be a week or two. Then a week or two goes by,” he said.

Meanwhile, small-business lending shows signs of recovery, with borrowing up 17% year-over-year in April, according to PayNet. But Snowe warns this uptick could incentivize banks to prioritize refinancing TARP debt over expanding credit access.

A Treasury inspector general report supports these concerns, finding that TARP banks accounted for 64% of the $9.2 billion requested from the fund as of April 18. The report cautioned that for some institutions, the SBLF money may merely replace TARP funds without boosting small-business lending.

Despite setbacks, the SBLF holds potential to support small businesses and drive job creation. For the program to succeed, stakeholders must prioritize transparency, efficiency, and a commitment to fostering meaningful economic growth. As Rep. Graves emphasized, “The goal is to make sure the fund works as intended — to help small businesses thrive.”

With unemployment still high and businesses hungry for resources, the pressure is on Treasury to deliver on the SBLF’s promise and prove it’s a game-changer for America’s small businesses.