WASHINGTON (CNN) - President Obama and Treasury Secretary Tim Geithner on Monday will announce administration plans to make lending to small businesses more attractive, two senior administration officials confirm.
Many small businesses, suffering from dried-up coffers and unpaid bills, are having a tough time getting loans from lenders.
"We know that small businesses are the engine of growth in the economy, and we absolutely want to do things to help them," Christina Romer, who heads the Council of Economic Advisers, said on NBC's Meet the Press Sunday.
Romer said the government would pump "a significant amount" of money into boosting small business lending, but she did not reveal a total figure.
The administration's plan deals with two programs handled by the Small Business Administration, the senior administration officials said.
The first one, the "7(a) program", allows small businesses to get loans of up to $2 million backed by the federal government through the SBA. Currently, the government guarantees up to 85 percent of loans below $150,000, and up to 75 percent of larger loans. Under the administration's plan, the government will temporarily increase the loan guarantee to 90 percent as an incentive to banks to lend.
The administration believes this increase will reduce the risk lenders face when they make loans to borrowers who cannot find credit elsewhere, and ultimately give the banks more confidence to sell and make more loans, the officials said.
The second program, the "504 program", guarantees up to $4 million worth of economic development projects for small businesses. Starting Monday, the administration will temporarily eliminate fees for lenders and borrowers on any new 504 applications. The aim is to reduce the costs to both borrowers and lenders participating in the program, the officials said.
The administration will also temporarily eliminate the upfront fees for 7(a) loans that banks charge borrowers. These fees go up to 3.75 percent for larger loans. The administration believes this will decrease the cost of borrowing for small businesses and make it easier for them to get the credit they need to make new investments, the officials said.
The fed should have set up shop as a loans company long ago and allowed the banks to fail, they only have themselves to blame.
All this money going to banks whose job it is to make sound financial decisions, you have got to be thinking we are throwing good money after bad with these bailouts. It is not a natural way for companies to survive or to be productive in, it just allows them to say "don't worry, the tax payer will pick up the bill" after they charge us fees for being unemployed and having a bank account.
Ok Republican, now we have a plan for small business. I am sure you will find some objections to this plan as well. It would be nice to see the Republican's come up with some kind of alternative plan.
iLLEGALS ARE ON THE TOP OF HIS LIST .
Interesting that CNN left out another quote from Christina Romer that she made today. She said she believes the US economy is "fundamentally sound". Now where have I heard that before. Oh yeah, John McCain said it during the election (when things weren't as bad as now) and Obama criticized him. The hypocrisy of this Administration continues to amaze.
One of President Obama's economic advisers said Sunday that the economy is fundamentally sound, a striking reversal from the Democrat's campaign rhetoric as his administration now guides the nation's financial health amid dire conditions.
Obama's Democratic allies pleaded for patience for an administration hitting the two-month mark this week, while Republicans said the White House's plans ignore small business and the immediate need to fix what ails the economy.
During the fall campaign, Obama mercilessly mocked his Republican opponent, Sen. John McCain, for declaring, "The fundamentals of our economy are strong." Obama's team painted the veteran senator as out of touch and failing to grasp the challenges facing the country.
On Sunday, economic adviser Christina Romer was asked during an appearance on NBC's "Meet the Press" if the fundamentals of the economy were sound. "Of course they are sound," she replied.
"The fundamentals are sound in the sense that the American workers are sound, we have a good capital stock, we have good technology," she said. "We know that - that temporarily we're in a mess, right? We've seen huge job loss, we've seen very large falls in GDP. So certainly in the short run we're in a - in a bad situation."
Just a week ago, White House Office of Management and Budget director Peter Orszag declared that "fundamentally, the economy is weak."
The seesaw message from the new administration drew sharp criticism from Senate Republican leader Mitch McConnell, who said Obama's team was exploiting the economic situation for political gain.
"They're taking advantage of a crisis in order to do things that had nothing to do with getting us into the crisis in the first place," McConnell said.
They'll need the loans mostly to pay for the Obama tax increase...
Thank Heavens! We are small business owners that are very pleased to hear that the administration is doing something to help us!
When is Washington going to muster the courage to tell the ceo's to forget about bonus's. If they want to leave who cares, don't tell me more bs that they are the only ones capable of doing the job. I know i am sick of hearing excuses. Time to grow a set, and be less worried about the sky will fall if these goons don't get their big bonus, and more worried about working stiffs. These sleazebags voted republican, and always will.
Still nothing for the suffering individuals. All big and small business. Not ONE of them is offering jobs.
They're just flailing away, hoping something will stick.
Obama's ears should have been a give away, a Mickey Mouse administration.
A good man doing every thing he can for America.
my mom used to ask, do you think money grows on trees, hey President Obama, pehaps someone needs to ask you.
As a small biz owner and tax payer, I'd like to request for Obama's economic teams. PLEASE DO NOT ANNOUNCE IMPERFECT PLANS WITHOUT DETAILED, IF OBAMA'S TEAMS DON'T KNOW WORKABLE NUMBERS OR PROCESSING. It's irresponsibilities that "Romer said the government would pump "a significant amount" of money into boosting small business lending, but she did not reveal a total figure."
I've been in a small business owner in New York. It's equally hard to get the SBA Loan as much as like to get star in the sky.
Keep your head high Mr. Tim. We need you!
Here we go again...........more dumb ideas from the Obama administration. What small businesses are you going to allow to use this money (loans)? I'm sure only the ones selectively picked by Obama. I'm sure any small business like a Christian bookstore or anything like that would be turned down........the same way as it was with the stimulus package.
Our youth group at church used to use showers during the summer from a public high school down the street from the church when we had events that were multiple days at the church. If that school would let us use their showers this summer, they would be banned from any stimulus money. How wrong is that? And that is in no way a violation of separation of church and state. It's simply a school being nice to the community.
"Obama to squander more money"...
This clown is a complete IDIOT! GET OUT OF THE WORKINGS OF OUR ECONOMY YOU MARXIST SOCIALIST PIG!
After all is done and economy is back on track, I still want to see Bush, Cheney and Rumsfeld escorted to prison.
I guess joe the plumber will accept this spreading the wealth around.
How about this:
no more bailouts.
Create a flat tax.
Take all taxes and add them up. Take 85% of this amount and divide it by the number of citizens. Divide this number by 12. Take this amount and send a check for this amount to EVERY citizen once a month.
Take the 15% for running the government – cut and borrow the rest.
Keep doing this until the recession is over. Why have so few decide how to get us ut of this when we could all help?
After that, either embrace change or go back to the same old same old
Obama is putting 730 million dollars towards small businesses. In obamas own words, small businesses account for 70% of the new jobs of the past 10 years. So he is spending 0.1% of the 787 billion dollar stimulus package. You heard it right, for every $1000 of stimulus money spent, $1 goes to help small businesses. It just shows how unqualified obama is in running the country. You wanted change, you got it.
Given the very large amount of my money that they have already been given, would it be too much to ask that Goldman Sachs pay for this particular program that might actually help someone that's not on Wall Street?
Or, should I just send the deed to my house and my car keys to Llyod Blankfien?
Anybody got Lloyd's address...?????
Oh No! There goes the take-over by the federal govt of the small businesses of the former USA.
And this tax cheat will turn around and tax the hell out of the same small businesses. These are the same idiots that are making plans to force wounded veterans to pay for their own medical bills for injuries and wounds sustained on active duty. You also whine about capital punishment as cruel and unusual, while you have no problem murdering innocent life in the womb. This is the demented logic of the American Liberal. You liberals are despicable, disgusting human beings.