updated 2/3/2010 3:40:22 PM ET 2010-02-03T20:40:22

The Treasury Department says it will invest up to $1 billion in small banks that serve poor communities as part of the Obama administration's efforts to spur more lending to small businesses.

The money will come from the $700 billion bank bailout fund. About 210 banks, thrifts and credit unions that are certified by the Treasury Department as "Community Development Financial Institutions" will be eligible.

The banks will pay only 2 percent interest on the investments, compared with the 5 percent that large banks were required to pay under the Troubled Asset Relief Program.

The details of the proposal, first outlined in October, were announced a day after President Barack Obama pushed a separate effort to shift $30 billion in TARP funds to a small business lending program.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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