March 16th, 2009
04:40 AM ET
9 years ago

Obama to announce plan to boost lending to small businesses

President Obama and Geithner will announce a plan to encourage lending to small businesses.

President Obama and Geithner will announce a plan to encourage lending to small businesses.

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.

Filed under: President Obama • Timothy Geithner
soundoff (110 Responses)
  1. Meredith

    This is too funny. But not really. McCain made it clear that small business needed to be taken care of if the economy was to rebound, but all Obama and Co. wanted to do was make fun of the "Joe the Plumbers" of America during the election.

    Now, after the new administrations failure to stimulate the economy (after spending almost 4 trillion of our dollars to do so), they want to act like this was their idea all along–help small business. Geez...give me a break!

    March 16, 2009 01:02 am at 1:02 am |
  2. kuriya

    This comment is for John King. I have watch your state of the union several times, There is a question I want to ask you why is it that whenever you have democrat or republican on your show you let the republican give the last comment? I want you to know that the person who gives the last comment is what people remember the most. You are becoming like a fox news or Lou who call himself Mr independent. May be if both of you can go back to your previous tapes you will know what I'm talking. Also CNN your coverage is coming less news. Does any one of you care about the school in South Carolina. Where is the news about that? By the way John that is news worthy then your interview with Cheney which angered a lot of people that watch your show including me.

    March 16, 2009 01:18 am at 1:18 am |
  3. Rick

    So will policies like this finally shine some light on the souls of broke Republicans? Even the moderately rich ones should see the hope and change that is represented here.

    The next step should be to impose a tariff tax on all the low quality products that Walmart imports from China. We can funnel all that revenue right back to China to repay our debt to their country. So that when the Walton family's ridiculuous "richest in the world" wealth finally dries up.....small business America will be stronger than ever.

    But those are just my dreams, lets hear all the responses that I'm ant-christian. I can't wait.

    March 16, 2009 01:23 am at 1:23 am |
  4. An American

    Tell me this dude don't look like a Crook!!

    Tell you what ...... I'll keep Jesus, My Guns and My Freedom........ And you can keep your #@)& Change!

    March 16, 2009 04:54 am at 4:54 am |
  5. Fair

    Hey ...... You want to make things fair and increase the Fed Tax Money? Google "Fair Tax" ... Basically a flat tax 23% that EVERYBODY pays, Tourists, illegals..... don't matter....... You completly do away with the IRS .... Everybody that works gets an immediate pay raise because payroll tax deductions stop - what's your highest bill every month? House Mortgage? WRONG..... TAX! and you can't "foreclose" on that! or I guess you can refuse to pay it unless you get picked to serve on Obama's cabinet like the Treasury Secretary Tim Geithner..... The head of Household gets a "refund" check from the Feds ea month based on number in Household.....But guess what ...The 545 on the Hill won't support "Fair Tax" Why? They lose the power to buy votes with their "entitlements....." "Fair Tax" will Greatly increase the Fed coffers to cover all social actions incl SSI ....Look it up

    March 16, 2009 05:09 am at 5:09 am |
  6. Fan of Common Sense

    It seems to me the best way to help small business is not to socialize the national baking system, but to CUT TAXES. B.O. is just using the so-called "economic crisis" as an excuse to execute his socialist agenda. His chief of staff has all but said that this is the plan.....don't let a good crisis go to waste.

    March 16, 2009 05:23 am at 5:23 am |
  7. theflyonthewall

    Sorry, can't trust the president and his clueless golden boy 'uhhh whats a plan?' Geithner

    March 16, 2009 05:57 am at 5:57 am |
  8. Dave

    Now he wants to take over small businesses also! He already has the banks and the auto industry. Way to go you Obama nuts! Keep drinking your kool aid while we become a socialist country.

    March 16, 2009 06:19 am at 6:19 am |
  9. TC

    It is hard to believe anything that comes from Geithner!!!

    March 16, 2009 06:44 am at 6:44 am |
  10. Mark

    Only because the stimulus was a total flop!!!

    March 16, 2009 07:04 am at 7:04 am |
  11. Al

    This plan will be a great idea as long as all of a great majority of the small businesses benefit. With the AIG bailout, which was a disgrace, especially after we were hit with the bill for these greedy individuals to get bonuses on top of their cushy salaries while we are all struggling.
    For this, the right thing to do is for the Government to take back the bailout money from AIG. Also, I hope that before this new small business plan is put into action that it is reviewed carefully so that it doesn't get everyone's hopes up and then leads to a lot of dissapointment like the Hope for Homeowners. In my state, only 8% are eligible, and meanwhile, my state has the highest foreclosure rate in the nation, and a lot of people were left to feel very put out, especially after finding this out and then hearing about the AIG Bailout. We want to see some real results now, not a big show with big promises and a bunch of public relations.

    March 16, 2009 07:09 am at 7:09 am |
  12. Joe

    Does this mean that Obama and rest of the Democratics realize their pork barrel "stimulus bill" does absolutely nothing to help the economy? Probably not.

    March 16, 2009 07:11 am at 7:11 am |
  13. Bill Plyler

    Good start but equity requirements must be reduced on SBA as well as excessive fees.. Just as homeowners have lost equity, so have samll businesses. The key is to focus on future true cash flow forecasts and not on collateral. Forecasts must be month-to-month cash budgets with careful analysis based on historical and future events and prices.

    March 16, 2009 07:26 am at 7:26 am |
  14. Thomas

    This is really starting to get old. The Obama Administration is taking government to a whole new level. They really need to go back to the basics. The role of government is and only should be to provide "Public Goods". For those who don't know public goods are goods that are for everyone but individual people will not pay for on their own. A prime example is road repair. No one would pay to repair the pot hole in their street, and why should they, they pay for it out of pocket, use it a few times a day, but all the other motorists get to use it for free and never pay for the repair, and worse still why would you pay to repair a road that you don't even use? I'm sorry, but Health Care is not a public good and should not be provided for by the Government. When I choose to pay for health care it affects me and my family, and that is it. No one else gets to use my health care for free, and if I choose to not purchase health care then I just have to pay more for the service then others. We need to get back to the basics in this country and let people fend for them selves. I have greath faith in the American people and believe that without all the help from the government they can not only make it but prosper.

    March 16, 2009 08:07 am at 8:07 am |
  15. Bryan

    great...they will loan money to companies but tax and regulate them to death.

    March 16, 2009 08:17 am at 8:17 am |
  16. Doug from OH

    What a crock.

    March 16, 2009 08:22 am at 8:22 am |
  17. Brian Crooks

    So much for all those people saying the government wasn't doing anything for small businesses. As a small business owner, I can't tell you how hard it is to get funding, especially through the SBA. And my initial loan was pretty small. This is a fantastic idea. I think this will be much more effective than tax cuts for the rich, as this will directly jumpstart small business loaning as opposed to giving 2% of small business owners a little bit more money at the end of the year.

    March 16, 2009 08:27 am at 8:27 am |
  18. Kevin in Ohio

    Here's an idea, Obama.... why don't you just cut their taxes so they can use their own money instead of having to borrow?

    March 16, 2009 08:30 am at 8:30 am |
  19. strong

    Who would want to go into business at this time? Too risky.

    Again, more hot air from 1600 Pennsylvania Ave.

    March 16, 2009 08:33 am at 8:33 am |
  20. Dawn

    Small businesses are where the jobs are right now; but the Republicans are trying to scare them into thinking that Obama is going to tax the hell out of them,when he had said he'd give them a tax break.

    March 16, 2009 08:37 am at 8:37 am |
  21. Typical White Person

    CNN – why did you bury the story about Maxine Waters on Saturday afternoon under a misleading headline?

    RIP Journalistic Integrity...

    March 16, 2009 08:46 am at 8:46 am |
  22. Gordon Shumway

    How do you raise your poll numbers? Have a new crisis! We'd be in the same stage of recovery or real close if nothing had been done, economic nature had been left to its own correction and we had saved all of our grandchildren's future debt.

    March 16, 2009 08:56 am at 8:56 am |
  23. Mark

    This should have been part of the first stimulus not wasting tax money on more worthless federal projects!

    March 16, 2009 08:57 am at 8:57 am |
  24. Jerry

    Obama has more "plans" than a dog has fleas. So far, giving money to large, corrupt...CORRUPT financial firms has not worked, but the employees love the bonuses!

    March 16, 2009 09:01 am at 9:01 am |
  25. John

    For all of you wondering where the praise is for Obama's leadership because you claim the DOW is it is....

    "Thank You President Obama for recovering 40% of the amount the DOW has gone down since your dreadful policies have been put in place"

    "Thank you for giving me only a 15% reduction in my 401 k rather than the full 25% you gave me earlier"

    March 16, 2009 09:07 am at 9:07 am |
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