The US Treasury will provide more favourable terms on government aid to small banks and credit unions serving low income areas as part of a broader push to encourage lending.
Administration officials said the aid would be extended under a Troubled Asset Relief Program initiative to provide capital to smaller financial institutions that focus on lending to poorer communities, reported The Wall Street Journal.
Small banks have tended to shy away from government aid, complaining the terms were too onerous.
Under the expanded program, eligible banks will be able to receive more capital from the US government - up to 5% of their risk weighted assets, as apposed to the original 2%.
Credit unions will be eligible for funds of up to 3.5% of their total assets, the equivalent of the 5% risk weighted figure for banks.
Related Story
US bank reforms a test to local market - Uncertainty about the Obama bank reform agenda is set to stir up the Australian share market this week, but may offer homeowners the silver lining of delaying interest rate rises.