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.
Theres no business like the lending business.Once upon a time you could make money saving it,but they made sure that didnt last long.Now the consumer has become the consumed,eaten by the giant tapeworm that only eats enough to keep its prey alive.Lookup "Solari" on google to find more on this subject.Please post this CNN.Thank you.
C'mon Obambi enough of this bailouts, you're putting future of our children and grandchildren in the PAWNSHOP.
The best you can do is to cut taxes across the board to stimulate the economy, putting people back to work. Government is NOT the solution for our problems, in fact BIG GOVERNMENT is the PROB LEM!
When government start injecting themselves into businesses, the more a nation goes down due to the fact people in the government don't know how the real business world work. These bureaucrats based everything in THEORY. If these people are business savvy, tfhey wouldn't be receiving salaries from TAXPAYERS!
The problem with this is the SBA is horribly broken. The fed loves to talk about small business, but they forget that the majority of "small businesses" are micro businesses. There are no viable programs for Micro Business. The fed needs to take a hard look at the SBA and what it does. They could learn lessons by modeling a national program after the one in New Hampshire (MicroCredit NH) where I used to live. We are so sorry for relocating to Montana where there is little real support for small business.
I challenge CNN to do an in depth meaningful piece on the realities of REAL small businesses in America, including the millions of Micro Businesses that help keep the economy flowing.
Doesn't matter what you do. It's all cycles. Whomever happens to be president when the markets turn up will get the credit. Whomever happens to be president when the markets turn down will get the blame. Although I do wonder where we would be if it weren't for Barney Fiffe, I mean, Frank, saying that Sallie and Freddie were sound back in 2003 when Bush wanted to regulate them.
Thank you Mr. President. I would suggest that we use other alternative than the SBA. SBA is time consuming.
Is this a "NO" too ,GOP?
That's funny, I remember Obama dismissing McCain's plan to help small businesses during the election. I think he said McCain was out of touch.
This will be interesting ,so far everything has been BS,I need some additional credit for my company because of the government has screwed up the market place so bad,it hard to get paid.
I feel that this a right thing to do as president. Small company need the chance to grow into a large company as well. I feel that we as a nation should help each other out we are all suffering from this hard time in this period.
Tax them to death and then try and work out how to get them dependent on you – the Obama way. The beginning of another Fannie Mae/ Freddie Mac? Loans for those who can't afford it – go Democrats let's see if you can lay the foundation for another disaster
If you have unpaid bills shouldn't you pay those off before going further into debt?
The DOW is down 20 percent since inauguration day and down 30 percent since election day. Really, Barry, don't you think you've done enough "helping?"
Barry can blame some things on Bush, but the 20/30 percent market slides can't be blamed on Bush.
"Under the administration's new initiative, the government will step in to buy these loans to help unlock the frozen credit market, using money from the $700 billion financial bailout package in the range of between $10 billion to $20 billion, one official briefed on the plan said.
In other words the president and geithner will be using money already set aside, not new money.
I know the repugs are yelling already because CNN failed to put how it will be paid for, so I looked it up for you.,
Everyone else is getting bailout, it's about time for small business sectors to get reinforment. Personally I applaud this move by the Barack Obama administration. Who says Obama is not for the common man? He is the common man who happened to make his way to the Elite DC circle. He knows what he is doing. Keep it up Mr. President!
Even as a democrat I'm really getting tired of seeing "more bailout money for so and so."
We need to stop with all this bailout talk. To much money is changing hands and I guarentee a bunch of it is going to be lost and given to people and companies undeserving.
I'm almost wishing I voted McCain if this keeps up.
I can't wait to see the Cheney/Palin 2012 economic plan.
This worries me. While you need lending to get going again, these types of loans are just as dangerous as the subprime ones that started this whole problem. Not sure about this.
Why are small businesses "suffering from dried-up coffers and unpaid bills," when they have been getting a steady dose of GOP tax cuts (that were supposed to make them invincibly competitive) you wonder?
Spur lending to small business how about ENFORCE IT
Spend baby Spend!!!! Geez Obama.....you and all your spending are going to run this country into the ground. Did you think to consider that problems MIGHT be solved by doing something other than throwing billions of dollars at them?
This country is in trouble.
Well it looks like President Obama took another Republican argument off the table,since the president is about to take care of small business.
Even Joe the "plumber" should be able to see that it is the Democrats that have his best interest. That spin and those lies from the right wing-nuts have fallen apart. They would rather do nothing, or refuse to take the stimulus funding. It is only the fool and the dead who cannot tell the source of true help and support.
Obama's trying to help small business?
What will the Repubs say now?
we really need to help small businesses inorder to move this economy moving again.
March 14th, 2009 9:20 pm ET
D. Major wrote, "If Mr. Obama would like for Republicans' such as myself to start liking him he needs to show some respect to people who do not agree with his policies & are offended by his stupid comments re: the GOP. I never voted for him & never will! I'm counting the days until he is out of office."
D. Major, let me ask you this question again, How many days are left untill Obama is out of office? I guess it is 665 days left for Obama. and then guess what? what? There will be another Democrat in the presidency for the next 4 terms.Tthat is 16 years untill the rightwing will reclaim it because in the state the GOP is in right now, they will not win over the minority and a great deal of the white vote as been predicted and proven right. They will even loose big time this time around come 2010 elections and 2012 and then all the way to 2016.
HERE IS THE FACT. the GOP have to win over 68% of the white vote and that is not going to happen because the Democrats have to lose 26% of the white vote to Republicrats. The last time I have checked, Obama lost to Mccain 14% of the white vote. If Republicans want to win the presidency thus far this time they have to gain an 11% of the white vote. But wait that is not going to happen because Obama has to screw up big time in his term. The way it seems right now the economy is gonna comeback and there will be prosperity even better than back in the Clinton/Gore days, so, there will be even a backlash of voter response to what the republicrats did in opposing to revive the economy when Obama saught bipartisanship and they obstructed him every step out of the way.
For a fact I say this: Obama and Biden will win the next election even bigger than before and will choose a successor after his two terms in office end by just endorsing a candiate and actively campaigning for that candidate. But wait, in the primaries of 2016 there will be allot of candiates that will seek Obama's endorsement, I can predict that right now, but Obama is gonna choose who thinks will not screw up the economy and the things that makes this great country so great. I say this that there will be a woman that Obama is going to endorse in 2016. I am not saying this will be former first lady and current first lady, but it is my instinct that says it is gonna be a woman. That woman has to put herself in the spotlight right after the 2016 elections. Period end of story.
Why didn't they realize this sooner? They only issues a small portion of the stimulus (60 million) to small businesses?
Do they suddenly have a clue?