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.
Small business is the backbone of our economy. This move, if successful, will power us back to the the top. Plus any President with the backing of small businesses will be a political success as well.
Is this all that this administration knows how to do is SPENDING?
We were in hole very deep hole left behind by Bush, and all that this administration wants to do is spend and put us deeper into debt.
How about taking back all of the money that was given to AIG, it seems that it is only going to pay for more BONUSES to the top executives, the ones that have run AIG into debt! WHAT A JOKE!
As the co-owner of a small business and Obama supporter, I applaud this move. It's a step inthe right direction. Small businesses employ 65% of America's labor force. If we succeed, the country succeeds.
This should have been done in the first package. Small business is the backbone of this country. I wonder how much more they are going to spend and where it will come from. I guess we'll see when our taxes go out of sight next year. Your right people CHANGE is coming and in a big way.
Tax cheater geithner doesn't have enough smarts to balance his check book. Although he was pretty good at cheating on his taxes.
They're going to boost small businesses than any earning over 250K , will get taxed to hell and back, good plan!
Well, before you give any more money to the banks, you've got a new, major headache to contend with, folks, namely a major loss in the credit union industry. Where many people thought, well at least the credit unions are safe from the toxic derivatives and mortgage mess, along comes the information that no, they are not.
WHO'S,,,,,,,,,,RIGHT ? ? ?
A bill to help small businesses in the US?
I think I can anticipate the Republican reply: Why reward the mediocrity and limited capability displayed by small business owners? Better to squander billions on sweetheart no-bid contracts for large mutinationals in the middle east.
Instead of lending more taxpayer moneyto small business, wake up and realize that the key is to REDUCE
taxes. I guess that goes directly against Barry's liberal tax and spend philosopy though. Wake up America!
I personally think the market has been manipulated. Look what happened from Tuesday when market started to recover. I think there is alot of crap in America we can not even trust our media. What a joke we have become?
it would seem to be maximumly ludicrous, that we pay hard earned taxes to provide idiotic ill skilled ceos, goofy bonuses while they skilllessly run their companies into the ground. is someone offering an explanation for this maximum stupidity?
Obama should have helped the small business owner before bailing out AIG, the Auto Industry and Wall-Street. Now AIG is going to give millions in bonuses instead of using that money to reduce their debt. Obama doesn't have the experience to run this country and the knowledge of choosing the right people. 5 or 6 had to step down because of their problems. I expect this country to go into a deep depression close to the one in 1929 if he keeps on lending millions of dollars. There are still thousands of foreclosures, companies closing and millions collecting unemployment checks. If I am correct Obama was talking about the economy and how he was going to fix it while campaigning. No new taxes. I remember McCain saying he will raise your taxes and he was right. How did the American public get sucked into voting for Obama. And will they make the same mistake over again.
Increase Micro-grants awards: If a business owner submits a plausible, reasonably good SBIR proposal, he or she deserves some compensation, since writing SBIRS often take time, networking, as well as travel in certain situations. $2000-$5000 would not only ease financial burdens, but would also encourage innovation.
Finally a positive step out of this White House. Make loans to private businesses (small, medium and large) easier! Make taxes for workers, investors and business owners, partnerships and corporations lower! Take away any unnecessary regulation to make businesses more efficient. The private market can get itself out of this recession if the government can get out of the way.
glad to hear it.
I was happy to hear Republican Bill Frist say that he thought health care reform was needed and Obama was doing a good job in his approach to the problem.
And the day after this announcement, Dana Perieno will say that was Bush's idea.
Are people are broke, and this dude is helping to make the perobelm worse, hwo in the heck can this mousey dude say that he is in control, when he can not even talk to the press, he gets hissy fitz!
what about money in the american people's pocket.. WHAT ABOUT US NOW!
Lending to Borack Obama's Democrats? Very-Small-Business..
#44 +Geithner = failures
Borack Obama's Flea-Market. Look at them Skoot!
Ben Bernanke was brilliant on 60 minutes explaining why we needed to do this spending. He concentrated on the Great Depression and why it began. Before we get the right wing "stop the spending!!" you should watch it...
Dang I was hoping for another good day in the market. Every time he talks or annonuces a program the market dives.