The future of accessible credit for small businesses

October 26, 12:33 PMMinneapolis Small Business ExaminerSherry Christianson

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Will small businesses get funding soon?
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The Obama administration has just announced new proposals for programs aimed at increasing lending to small businesses through the TARP (Troubled Asset Relief Program ) bailout and SBA, in order to help economic development and growth of small businesses across the nation.

Small businesses are desperately in need of  new funding from the SBA, as banks have been tightening lending standards by cutting back and eliminating lines of credit and credit cards which, in the past, have been common sources of working capital for small business owners.

President Obama says that there is still too little credit flowing and too many entrepreneurs who cannot get loans to make payroll and keep their doors open, and not enough loans being approved to start new businesses.

The Obama administration is now asking to;

•  Reduce the cost of TARP investment from 5% to 3% for small banks and 2% for CDFI’s      (Community Development Financial Institutions Fund, providing funding to lower income communities across the nation).

•  Increase in the size of SBA loan programs.

•  Hold a business conference in November conducted by the Treasury to discuss with Regulators, Congress, and Small Business Entrepreneurs, the issues of companies struggling in our weak economy and to find out what more Washington can do to help.

While the proposed changes indicate that economic times are looking up, critics are saying that impending tax demands from other new reforms will cause an increasing impact on small businesses, and some sources compared Obama’s credit proposal’s potential success to “ offering a Christmas bonus followed by a pink slip."

In the mean time, small businesses across the nation continue to struggle, and the lack of accessible credit has forced many entrepreneurs to close their doors or to think outside the box in order to find alternative funding sources.

Political optimists are hoping that the newly proposed changes will come in time, as the future of  small businesses, (providing jobs for over half of the private workforce in the U.S.), and our nations’ economic stability depends on It.