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Bank of America announced last week that it will provide $10 million in grants to Community Development Financial Institutions and other nonprofit microlenders to spur some $100 million in small-business lending. The move marks the first time the financial behemoth will be giving, not loaning, these institutions money for small businesses.

The grants must be used to bolster loan loss reserves needed to access funds from the U.S. Small Business Administration and the U.S. Agriculture Department. Both agencies require CDFIs, organizations that are certified by the Treasury Department, to set aside around 10 percent of the capital they provide in reserves. So, for instance, for every $10 a microlender offers, it must stash away a dollar to cover potential losses.

"We started hearing that the availability of money was tied up because of the lack of reserves and thought this [initiative] was the best way to address it," said David Darnell, president of global commercial banking at Bank of America.

Source: http://www.washingtonpost.com/