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WASHINGTON -- President Barack Obama unveiled on March 16 a small-business stimulus package aimed at getting banks receiving federal bailout money to increase lending.
The goal, said White House officials, is to assist small businesses in making payroll, buying equipment and maintaining (or even expanding) employment levels. The plan includes $730 million to immediately reduce small-business lending fees and to increase the government guarantee on some Small Business Administration loans.
The measure calls for boosting bank liquidity with up to $15 billion, which is intended to unfreeze the secondary credit market, and reduce lending fees and loan guarantees. The administration also announced that the 21 largest banks receiving government money must now file monthly reports on loans provided to small businesses.
"As president I will continue to do everything in my power to ensure that you have the opportunity to contribute to your community, to our economy and to the future of the United States of America," Obama said.
Also included in the plan is a series of new IRS rules for temporary tax breaks designed to help small business. These will allow: (1) businesses earning up to $15 million to claim losses for the past five years in the current tax year; (2) tax writeoffs of up to $250,000 for investments this year; (3) a reduction in estimated tax payments of up to 90% over the previous year's filing; (4) larger depreciation deductions within the first year of property purchases; and (5) exclusion of up to 75% of capital gains for those who invest in small businesses.
Treasury Secretary Timothy Geithner, who made a direct appeal to local banks to start lending again, commented: "When banks individually pull back, out of a sense of prudence and caution, the collective impact of those actions will make the economy weaker and make each individual bank worse off. By pulling back on credit, you push businesses to pull back, and this dynamic can feed on itself."