New York (CNNMoney.com) - President Obama and several members of Congress are drafting legislation for a new, $30 billion fund that would infuse community banks with capital specifically earmarked for small-business lending.
The plan is the latest spin on a proposal Obama first unveiled in October and touted in his State of the Union address. The idea went nowhere, thanks in part to the unpopularity of Obama's plan to fund the program with money from the Trouble Asset Relief Program. Congress didn't want TARP treated like a piggy bank, and community bankers didn't want the stigma of taking funds from a program known for Wall Street bailouts.
But small business lending remains a glaring trouble spot - a critical problem because small companies are traditionally the country's main generator of new jobs. Banks have slashed billions from credit lines, and small firms weakened by the recession are struggling to meet tighter underwriting standards.