Obama's initiatives to increase lending to small businesses

October 23, 2:18 PMBaltimore Small Business ExaminerMarian White

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President Obama speaks in Landover, Md., Oct. 21, 2009 (AP Photo/Charles Dharapak)

President Barrack Obama made a scheduled visit to Landover, Maryland on October 21, 2009 to announce new lending initiatives for small businesses. President Obama was joined at the meeting by several federal, county and state officials including Secretary of Treasury Tim Geithner, SBA Administrator Karen Mills, Governor Martin O’Malley, Senator Ben Cardin and others.

The backdrop for the visit was Metropolitan Archives, a company started just five years ago by two friends who have grown their company into one that was able to purchase their current building with a SBA backed loan. Obama stressed that it is companies just like Metropolitan Archives that over the last 15 years have created 65% of all new jobs in our country, with more than 50% of all Americans working in the private sector owning a small business or are employed by one. Based on these numbers alone, the survival of small business can’t be ignored as a foundation of economic recovery for all Americans.

Ironically, it’s these same small businesses that have been hardest hit by our current economic status, with many banks removing or severely reducing credit to small business owners. Many entrepreneurs were virtually cut-off from resources needed to start, grow, or even maintain their businesses. Obama reiterated his Recovery Act initiatives including the temporary reduction or elimination of SBA loan fees, while increasing the guarantee on some loans up to 90 percent. The President reported that in the last eight months alone, the Recovery Act has supported over 33,000 loans to small businesses and have created $13 billion in new lending. The Recovery Act also has a tax relief component expected to give $5 billion back to small businesses this year.

In order to start the credit flowing back to small business and continue the economic recovery, steps have been taken to increase the amount of the maximum of various SBA loans to $5 million. This increased cap does include SBA’s most frequently utilized 7(a) loan, most often used to help entrepreneurs start businesses, get equipment and obtain working capital. Smaller community banks were not left out of the equation, with additional steps taken to make funds available to them at rates more affordable than those offered to the largest financial institutions. The idea here is two-fold, to make SBA loans more attractive to lending institutions to support them, and more affordable and accessible to the small business owners who rely on them for business success.

Not to rest on his laurels, the President asked Tim Geithner and Karen Mills to hold a convention in the near future to include congressional leaders, lenders and small business owners to identify additional steps that can be implemented to increase the amount of available credit and create sound lending practices. The success of small business and our overall economy is dependent upon smart actions.

 For more info: To read other small business related articles, subscribe. To learn more about the services of the SBA, continue reading here. To read a transcript of President Obama's Landover visit, click here.