White House Offers Details of Plan to Foster Small Business Growth

Treasury Secretary Tim Geithner today announced details to some of the promises made in the government's Financial Stability Plan outlined last month, including ways to spur banks to lend, eliminating loan fees and creating new bank-lending reporting requirements.

The Obama administration believes that the nation's "economic recovery will be driven in large part by America's small businesses" and notes that small firms have generated about 70 percent of net new jobs annually over the past decade, according to a statement from the White House. However, entrepreneurial growth has been stunted as credit has dried up; the Small Business Administration typically guarantees about $20 billion in loans annually but new lending is leaning toward less than $10 billion this year.

Treasury announced today that it has appointed an investment manager who will be able to purchase securities backed by portions of SBA's popular 7(a) loan program. This action, as explained by the department, will help unclog the backlog of securities that has piled up since the beginning of the credit crisis last year by providing banks with a source of liquidity so that they are inspired to lend again.

Also, beginning today, the government has eliminated borrower and lender fees for two popular loan programs, the 504 and the 7(a). These fees -- which go up to 3.75 percent for larger loans -- increase the cost of borrowing for small businesses and make it more difficult for them to access the credit they need to expand or make new investments. The SBA also will offer a refund for borrowers or lenders charged with any of these fees beginning Feb. 17.

Treasury also will require for the first time that the 21 largest banks receiving Financial Stability Plan assistance to report their small business lending monthly. The department is also calling for every bank nationwide to report their total lending to small firms in their quarterly reports rather than just once a year. Geithner also called on all banks to make the effort to extend small business loans to creditworthy borrowers.

Small Business Committee Chairwoman Nydia Velazquez (D-N.Y.) cheered the move, saying: "Taken together, these small business lending provisions will unlock $21 billion in new lending for small firms, creating or saving 600,000 jobs."

However, at least one small business group was displeased. Lobbying group the Small Business and Entrepreneurship Council said the plan "does not fully help what is hurting small businesses." The council's chief economist, Raymond Keating, said: "Rather than fiddling with various government programs, the Obama administration would accomplish much more in terms of boosting confidence and getting the economy moving by, at the very least, moving away from imposing higher personal income, capital gains, dividend and estate taxes on investors and business owners, not to mention increased energy costs through a cap-and-trade regulatory scheme."

By Sharon McLoone |  March 16, 2009; 12:05 PM ET Economy Watch
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With the US stock market ralying Limbaugh and his America hating Sycophants must be realy upset.

Posted by: walker1 | March 16, 2009 12:55 PM

So now the empty suit wants to aid small businesses, which create most jobs. The lowlife slug could have done that over a month ago, and saved thousands in your 401Ks. Thanks to all the weak and greedy minds who elected this incompetent bozo.

Posted by: LarryG62 | March 16, 2009 1:21 PM

What about the small businesses that do not use credit to fund their operations?

Nothing for them but more taxes on fuel, electricity, and unemployment taxes.

Posted by: jdcw | March 16, 2009 1:27 PM

LarryG62,

Bush had from September, when the economic turndown became obvious, until he left in January. Omaba did this on what, his 57th day in office? My how some who held their tongues in the face of the incompetent Bush administration now have very sharp tongues.

This is why conservatives are the nothings of know and republicans are the party of no.

Posted by: bevjims1 | March 16, 2009 1:49 PM

Small Business People - this phony political tactic is all about getting your buy-in for the Employee Free Choice Act. Please study this act and make sure you want this thing. The EFCA is your ticket to uncontrollable labor costs. And when the EFCA drives you out of business, you may find that you will not be able to legally go out of business.

You all know what works. Only the free market provides you with a solid, long lasting foundation for your business that is not dependent on some short term fixes and promises that politicians will let dry up when push comes to shove.

Demand free market policies from this President.

Posted by: hz9604 | March 16, 2009 2:14 PM

And when the support for your small business from your fly-by-night politicians (i.e., quid pro quo Democrats) drys up, you will still be stuck with the union problem they unloaded on you.

Posted by: hz9604 | March 16, 2009 2:22 PM

Have you folks noticed that this $780 Million is only one tenth of one percent of the $780 Billion bailout package.

It looks like the administration really believes in Small Business.

How about some deeper reporting?

Posted by: warrior5 | March 16, 2009 2:52 PM

It's a shame how much the Socialist Republicans hate the engine of America, small business owners who make less than $250,000 a year and typically work more than 70 hours a week for little pay.

But, kudos to President Obama for sticking up for them and telling the Socialist CEOs/execs at AIG no bonus for you, while helping out America's business interests and job creation in one fell swoop.

Posted by: WillSeattle | March 16, 2009 2:53 PM

So I've laid off my employees and moved my office into my home. Please tell me how the $@## making it easier to get a loan is going to help me? We're trying to survive, not expand. And even with the government's actions, no bank is going to be handing out loans to small businesses in this economy.
How about forgiving my debt to the IRS? How about not making me pay into the unemployment fund for the people I've had to lay off? How about a free handout so I can pay myself a huge retention bonus?

Posted by: chris15 | March 16, 2009 3:59 PM

Kudos to Obama to realize that it's entrepreneurial investment that creates jobs, not the "gummint".

Posted by: tifoso1 | March 16, 2009 4:20 PM

Small Business People - this phony political tactic is all about getting your buy-in for the Employee Free Choice Act. Please study this act and make sure you want this thing. The EFCA is your ticket to uncontrollable labor costs. And when the EFCA drives you out of business, you may find that you will not be able to legally go out of business.

You all know what works. Only the free market provides you with a solid, long lasting foundation for your business that is not dependent on some short term fixes and promises that politicians will let dry up when push comes to shove.

Demand free market policies from this President.

Posted by: hz9604 | March 16, 2009 2:14 PM

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Posted by: htruman | March 16, 2009 4:42 PM

The 7(a) program is unpopular and not the source of much capital for small business. One of the problems is the collateral in that the bank usually won't take the business assets as collateral (unless the SB is a capital intensive operation, say a towing company with well documented value on its hard assets). So the Small businessman must pledge his home and retirement funds and the bank will always have first standing with recourse.

With home prices in decline and many underwater, its not even possible to pledge the home equity if one actually wanted to.

Posted by: Curmudgeon10 | March 16, 2009 4:51 PM

So now the empty suit wants to aid small businesses, which create most jobs. The lowlife slug could have done that over a month ago, and saved thousands in your 401Ks. Thanks to all the weak and greedy minds who elected this incompetent bozo.

Posted by: LarryG62 | March 16, 2009 1:21 PM

-------------------------------------------

LarryG62, I'm an Obama voter and one of his many well earning voters who would have actually recieved a tax cut by voting for McCain. Instead I'm sleighted to incur a slight tax increase from Obama.

Do you think I was ignorant of this prospect when I voted for Obama? Hmmmmmm, no, I was actually fully cognizent of the fact that I'd be paying more taxes, and thus taking home less in disposable income. For the record my choice was based on the fact that paying a little more of my income was the responsible thing to do in order to elect someone who would pursue the best long-term solutions for our country's challenges instead of the cheap talk/talk, no action rhetoric that has defined your party's lack of oversight since the early 1980's.

But hey, call me "greedy" if you want.

Posted by: htruman | March 16, 2009 4:56 PM

You whining republicans. You had it your way for a very long time. If you couldn't get rich from the "go shopping" in a time of crisis president then you really shouldn't be in business. You are a terrible businessman/woman.
Let me give you a hint; the country is going green. This means that you need to invest or start a business to help the planet and people. Or you can struggle in the dumb businesses that rape and destroy the environment and are useless to most people. Figure it out Mr. Republican businessman or just shut up and get out of the way.

Posted by: adrien17a | March 17, 2009 6:03 PM

The government’s action, though slow-- to inject liquidity into the credit market, is an all too familiar reminder of the hurdle facing SMBs in the current economic climate where lending has virtually dissipated. This hurdle has the resemblance of a “credit road block” set up by lenders. These thriving, undercapitalized, SMBs have seen their credit lines dry up, canceled or simply refused. “Obama’s Plan” to jumpstart lending by reducing risk and increase confidence to lenders is certainly a start, but also a call to action for SMBs to find alternative sources of funding. While the government has finally taken an actionable interest in aiding small business, it is those SMBs that must also realize their fiscal and fiduciary responsibility to not keep all their “eggs in one basket”. If nothing else, this credit debacle has proven that relying on one source of funding can be detrimental to the survival or growth of a company where cash flow remains the life blood of their business. This concept is a commonality amongst small to mid-sized businesses that become Sellers on The Receivables Exchange. By selling their accounts receivable in real-time auctions through our online marketplace, these SMBs are tapping into the cash resources of a global network of accredited investors who compete against each other to purchase their receivables. Rather than relying on a single lending source or an unsound economy, these Sellers are able to regain control of strategically managing their cash flow.
Learn more about trading receivables at The Receivables Exchange
(alt: Learn about trading accounts receivable)
http://www.receivablesxchange.com/opencms/opencms/how_it_works/index.html

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