January 28th, 2010
10:15 AM ET
8 years ago

Main Street frustration: 'Everything is going to banks'

 In his State of the Union speech Wednesday night, President Obama touted a slew of federal initiatives aimed at stimulating small business hiring and growth.

In his State of the Union speech Wednesday night, President Obama touted a slew of federal initiatives aimed at stimulating small business hiring and growth.

New York (CNNMoney.com) - In his State of the Union speech Wednesday night, President Obama touted a slew of federal initiatives aimed at stimulating small business hiring and growth. Again.

Small companies employ around half of America's workers and drive most of the country's job growth. Obama talks frequently in his speeches about the vital role small companies play, and his administration has launched several efforts to bolster struggling Main Street businesses. But most of the president's small business proposals remain in limbo, caught in bureaucratic logjams and the Great Black Hole of Congress.

A year ago, Obama set the stage during his first major economic speech to Congress. "I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can't pay its workers or the family that has saved and still can't get a mortgage," Obama said in February. "That's what this is about. It's not about helping banks; it's about helping people."

But small business owners across the nation say they feel left out of the stimulus and recovery action.

"Basically, it seems to me that Washington's efforts have been to help Wall Street, not Main Street," said Kim Griebling, president of Custom Flag Company in Westminster, Colo. Griebling and her father bought the company in 1998 and now employ a staff of eight. As the economy deteriorated, so did the demand for flags.

Griebling applied in September for an America's Recovery Capital (ARC) loan, an emergency financing program created as part of February's stimulus bill. The program offers qualifying business owners a small, government-backed loan on very attractive terms, but those trying to land ARC loans face a gauntlet of administrative obstacles. While bailed-out financial giants like AIG got financing fast from Washington, business owners wait months.

"People don't realize that $35,000 for a small business makes a huge difference. I am on the verge of possibly having to lay off people," said Griebling. Her loan was approved in December, but she hasn't received the money yet - and her patience is wearing thin.

"I definitely pay attention, but I would say I am more skeptical," she says of politicians' talk of helping small companies like hers.

Geoffrey Zeamer, the owner of scientific instrument maker Abbess Instruments in Holliston, Mass., also feels that small companies are being overlooked.

"I listen very carefully and on a daily basis as to what is going on, and I have found the last year extremely disheartening because everything is going to banks," Zeamer said.

Zeamer is an engineer who has owned his 17-employee company since 1982. He thinks the government got it backward by funneling money to banks to save the economy.

"If the government really wanted to stimulate business, then you give out orders. You order more planes, trains, you buy more bridges. If you give banks money, they look out and say, 'nobody has any orders, we are not going lend out,'" said Zeamer. "That seems to have escaped them. I think it's Basic Economics 101."

Here's a rundown on where President Obama's small business proposals from throughout the past year currently stand:

Tax credits for jobs: The government's economists estimate that small businesses have created 65% of America's new jobs over the past 15 years. In December, Obama delivered a speech at the Brookings Institution in which he endorsed tax breaks to encourage small businesses to hire.

But there's a blizzard of competing proposals for what form those incentives should take, from a temporary payroll tax holiday to per-worker tax credits for new hires, and none have yet gained momentum in Congress.

In the same speech, Obama backed a trifecta of tax cuts intended to spur small business investment and capital spending. Congress hasn't yet taken significant action on any of them.

TARP for community banks: Small businesses are still struggling to access the capital they need for their day-to-day operations.

"When you talk to small business owners in places like Allentown, Pennsylvania or Elyria, Ohio, you find out that even though banks on Wall Street are lending again, they are mostly lending to bigger companies," Obama said Wednesday. "Financing remains difficult for small business owners across the country."

In October, the President proposed a collaboration between the Treasury Department and the Small Business Administration to make capital cheaper for community banks that commit to increasing their small business lending.

Under the proposed plan, banks with less than $1 billion in assets would be able to borrow money from the government at a 3% dividend rate. That's a discount on the 5% rate the Treasury currently offers borrowers through its Capital Purchase Program, a TARP (Troubled Asset Relief Program) initiative.

Three months later, the government is still drafting guidelines for the initiative.

Obama invoked the plan in Wednesday's speech.

"I'm proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat," he said."

Loan limits: In the same October speech, Obama also threw his support behind Congressional efforts to raise the ceiling on SBA loans. Currently, the maximum loan size available under the SBA's major lending programs is $2 million. Policymakers would like to lift that limit to $5 million.

Both houses of Congress have considered the measure, but they've failed to agree on legislation to enact it into law.

Bigger incentives for loans: Amid a slew of stalled initiatives, one program has seen success.

SBA-backed loans represent a tiny portion of the overall small business lending landscape, but they're a vital lifeline for many new and growing companies. Last year, the SBA's loan volume plunged.

February's Recovery Act set aside a $375 million funding pool to temporarily eliminate fees for a SBA loans and increase the portion of each loan that the government guarantees, up to 90%. That move proved so popular that the money allocated for it ran out around Thanksgiving. Just before Christmas, Congress appropriated another $125 million to keep the incentives

The data shows that lending has rebounded from last year's lows. In the three months ended Dec. 31, the SBA's 7(a) program processed more than 12,000 loans totaling $3.8 billion. That's a sharp pickup from the 9,070 loans, totaling $1.9 billion, the agency backed a year earlier.

Filed under: President Obama
soundoff (38 Responses)
  1. Sarah

    Then blame your State and not the President.......Oklahoma is sitting on stimulas money they are the ones that need to get it out to main street.......

    January 28, 2010 10:46 am at 10:46 am |
  2. Rick McDaniel

    The government is in the back pocket of business, at the expense of the citizens.

    January 28, 2010 10:49 am at 10:49 am |
  3. Hugo

    Okay, who gave the money to the banks? Who set the stipulations for the loans or bailouts to the banks? It is easy to side step the responsibility of fiscal mismanagement and regulatory failures but who mandated that banks loan money to people without any skin in the game? Look in the mirror dumbocrats! I for one am sick of the Fed pointing their finger at Wall Street and the banks, quit funding them or at least have a little foresight on how they are to repay us for the use of our money. This Administration is so discombobulated that the left hand doesn't know what their other left hand is doing!

    January 28, 2010 10:50 am at 10:50 am |
  4. REG in AZ

    The Republican Party has firm control over its people and they clearly demonstrate that they act in complete unity. At first that may seem a compliment, especially when contrasted to the independence seen in many Democrats and the result in their difficulty in achieving consensus. However, besides not having the benefit of the individual consciences representing their different constituents and then also the existence of the coercion and intimidation used to maintain control, the real question becomes "what is the Republican focus and who benefits?"

    After eight years of Bush-Cheney, with the complete and stubborn support of the full Republican Party, there can be no doubt that their total concentration is on benefit for Special Interests and the powerful, influential and wealthy minority who strongly overtly and covertly support them. Further substantiation is seen in their current irresponsible and belligerent total focus on just faulting and blocking/obstructing everything, without concern for value or cost, in hoping the public will blame the Obama administration for not accomplishing enough. Throughout both periods their rhetoric has consisted of considerable subterfuge aimed to manipulate public opinion but when the words are put aside their actions show a complete disregard for the majority and just an arrogant self-serving focus on their own agenda. There are those Republican backers who identify as 'ultra-conservatives' but their real interest can be seen as 'more money for them and the hell with the rest'.

    Whether Democrat, Republican or Independent one only has to objectively look at the status of the vast majority to see the losses incurred. As President Obama stated, with the severe problems we have today, that he inherited, while currently making some progress it will still take time and be costly. To think the Republicans could or would do better is ludicrous and self-delusional. President Obama said that "they were sent there (to Washington) to serve the people and not their own ambitions" and it seems obvious the Republicans literally don't get that.

    January 28, 2010 10:53 am at 10:53 am |
  5. diridi

    if you have any brains, just regulate very tightly, on these Banks, and Wallstreet....ok. visa and Master card, American Express are robbing the poor...fix and talk...outrageous interest rates...fix and nab...

    January 28, 2010 10:54 am at 10:54 am |
  6. Franky, Land of Lincoln

    If you look carefully and insert that components of the speech to which he made about the past, he in fact contradicted himself. Which I find diturbing and unpleasant to say the least.

    There's no question it was a long speech and I promise you that in a week from now, people are gonna forget the main purpose of it but since the media is pretty much on it, the theme will be jobs and jobs. And small business is no question.

    While I have great respect and amiration to the Prez, there is one thing I did not hear from him which I want to hear form quite an awful long time...surpluses. Profit, revenue, stocks baby! I don't know if he understands the environment we're in makes it much difficult but how in the world are we gonna compete and reduce our debt if we don't even know how to raise money? How to make profit for the future? Seems to me that protecting our investsments are much important, and no question it is but it seems to me that legitimizing our revenue is one that needs to be paid to close attention.

    In my opinion, I don't think he's gonna do enough to help small business, because in all fairness big biz are the ones that have the majority, not the minority, which seems the Administration is portraying against small biz. It does look like a bias, it does look like an effort to suggest that he will help...if it goes according to plan.

    January 28, 2010 10:54 am at 10:54 am |
  7. C. Farrell, Houston, Tx

    If Americans would stick together we could send a strong message to some of these banks by choosing a few to do business with and the ones that continue the same practices (bonuses) will soon get the message. We have always had a practice of boycotting products, companies, etc. until they get the message.

    January 28, 2010 10:57 am at 10:57 am |
  8. GI Joe

    We need to vote out ALL the obstructionists that are NOT working for the good of our country, but are working for the good of their party.

    January 28, 2010 10:57 am at 10:57 am |
  9. matt

    MAIN STREET FRUSTRATION IS BECAUSE OBAMA IS NOT LISTENING TO OUR OPPOSITION TO OBAMACARE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    January 28, 2010 10:57 am at 10:57 am |
  10. LacrosseMom(the real one)

    I am just a 'regular person' who has read the Wall Street Journal, etc., for years. I am old enough to have lived through the Twin Recessions of '81 & '82, the Crash of 1987(very scary) & now this Great Recession. People do not seem to understand, that IF the government, meaning George W. BUSH, Hank Paulsen, and now President Obama had allowed the BANKS TO FAIL, we on Main Street would have been in the middle of a major DISASTER.

    In simple terms: IF Mr. & Mrs. Main Street, use Credit Cards, have a Second Mortgage, a loan for a boat, and say.... Bank of America, FAILS, the BANK WILL CALL IN THE LOANS, DEMAND MAIN STREET PAY UP, AND MAIN STREET CAN'T BECAUSE...... MAIN STREET IS IN DEBT UP TO THEIR EARS!

    SO, the government Bush & Obama, must help the banks or face THE SECOND GREAT DEPRESSION.

    IF YOU THINK 10% UNEMPLOYMENT IS WAY........ THINK ABOUT 20 OR 30%! (excuse the shouting)

    January 28, 2010 10:58 am at 10:58 am |
  11. Right Leaning Independent

    Obama continues his assault on big business widening the division between Wall Street and Main Street. Does Obama not get the fact that business creates jobs for the folks on Main Street! He is shooting the Golden Goose that can provide the jobs he needs to get people on Main Street back to work! His arrogance has no limits!

    January 28, 2010 10:58 am at 10:58 am |
  12. More blame, taxes and penalties

    Obama playing his polarizing 'blame game':
    • He (a wealthy man that only really donated to charity the year he ran for president), blames the rich.
    • He blames the bankers (even though he takes big donations from Goldman Sachs, Fanny and Freddie Mac, Citi Bank....) and give them breaks.
    • He blames republicans (even though his party had the super majority and could have passed anything).
    • He still blames the past administration
    • He wrongly blames the Supreme Court (either he was misinformed or just playing politics).

    Obama isn't a leader, but an excuse maker-in-chief.

    January 28, 2010 10:59 am at 10:59 am |
  13. Right Leaning Independent

    Obama threw a carrot out there for everyone in the US no matter what party or income level you are! He pandered to the entire population with his rhetoric. My opinion is he will not live up to many of those promises – just like the past year....

    January 28, 2010 11:00 am at 11:00 am |
  14. Jack Fl

    Sounds like our President is sending good bills to congress where they bog down. Politics before people. Congress as a whole ought to be charged with derelection of duty.

    January 28, 2010 11:01 am at 11:01 am |
  15. Right Leaning Independent

    Spending Freeze! Developing Nuclear Energy! Drilling Offshore! No Earmarks! When did Obama adopt McCain's agenda????

    January 28, 2010 11:02 am at 11:02 am |

    The President gets it and has always gotten it, now if congress and the Republicans would GET IT And stop their Partisan bickering and all the Energry they use in tearing eachother down instead take that energry and WORK TOGETHER! Then maybe our country would be a better place but the Republicans WILL NOT WORK TOGETHER Their only stragety is to tear down the Dems and President and regain power!!!

    January 28, 2010 11:03 am at 11:03 am |
  17. File under "Sarcasm"

    Credit flows through banks and policies need to make those funds available. Obama wants to keep bashing big banks and big businesses for its populist appeal but then complains how they are not aggressively lending money as they wonder how he will tax or regulate them next.

    January 28, 2010 11:07 am at 11:07 am |
  18. donttreadonme

    Does this President stand for anything? He spoke favorably about offshore drilling and clean coal last night while he has opposed it all year, even though he supported during the campaign??? He talked about all the issues surrounding Healthcare, folks being dropped, refused coverage and pre-existing conditions but never once mentioned the Government option. He condemned ear marks, lobbyist, lack of transparency and partisan politics all of which he is guilty of! He spoke about a spending freeze but he already has taken the money. He took credit for ending the war in Iraq when we know that was already happening. He say NOW he will focus on jobs well he is about a YEAR late on that one!

    January 28, 2010 11:07 am at 11:07 am |
  19. citizen AND BELIEVER

    Yea .... RIGHT ? A year ago, Obama set the stage during his first major economic speech to Congress. "I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can't pay its workers or the family that has saved and still can't get a mortgage," Obama said in February. "That's what this is about. It's not about helping banks; it's about helping people."

    Believe this and he will get us into LOTS MORE DEBT – if that's possible.... ! What an orator.

    Talk the talk and try to get re-elected.... the "gravy boat" these politicians are on has to STOP. NOVEMBER IS COMING – let's hope it's FAST enough to save the UNITED STATES of AMERICA

    January 28, 2010 11:08 am at 11:08 am |
  20. Keith in Austin

    Hey Barry! Fool us once, shame on you! Fool us twice, shame on us! Americans aren't buying your promises any longer. Your ACTIONS speak much louder than your words. You're liberal and socialistic policies are toast! PS, nice try in touting yourself as a conservative populist last night. What a joke you are!

    January 28, 2010 11:08 am at 11:08 am |
  21. billy123

    I agree everything goes to the banks and main street gets the bill:

    My question to President Obama and Congress where is main street bail out?

    January 28, 2010 11:10 am at 11:10 am |
  22. Nancy

    I thought the President's speech hit the mark. I am so disgusted by all the negativity surrounding him and everything he says. If you don't agree with a position, then let's hear your idea. These naysayers just need to shut up!!!

    January 28, 2010 11:13 am at 11:13 am |
  23. IndependentAmerican

    Had the banks not been "bailed out" we would have been in another Great Depression. Americans are not well informed, nor do they know what the implications of banks failing are.

    January 28, 2010 11:20 am at 11:20 am |
  24. Rickster

    Horrible speech from a horrible president. I could actually see President Pinoccio's nose growing as he spoke. And please, California, I'm begging you, please vote that lunatic Nancy Pelosi out of office. She is an absolute national embarrassment sitting back there adjusting and readjusting her false teeth through the entire speech and hopping up and down like a 3rd grade schoolgirl.

    January 28, 2010 11:21 am at 11:21 am |
  25. southerncousin

    What really irritates me is how much has gone to the corrupt unions and how the SEIU president has been invited to the White House so many times, while the House Minority Leader has not been spoken to by the President's chief of staff for over a year. I think that speaks volumes as to this corrupt, lying administrations motivations and methods of operation. Obama is a liar and a corrupt criminal.

    January 28, 2010 11:25 am at 11:25 am |
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