LANDOVER, MD -- President Barack Obama visited a small business in Maryland this week where he unveiled a new initiative to shore up lending for America’s small businesses. Since the financial crisis began, small businesses have faced a perfect storm: the pulling back of lending by banks, deterioration in the value of real estate that they often rely on for collateral and weakened sales.
"These entrepreneurial pioneers embody the spirit of possibility, the tireless work ethic, and the simple hope for something better that lies at the heart of the American ideal. And they have always formed the backbone of the American economy," he told more than 150 employees of the business.
His administration's "New Small Business Lending Initiative" is comprised of three major components. The first would promote lower-cost capital to local banks and the financial institutions that lend to small businesses in rural and urban areas hardest hit by the tanking economy.
The second component would seek legislation to increase the maximum size of three types of Small Business Administration loans. Under the plan, the maximum size of SBA 7(a) loans would increase from $2 million to $5 million. These would be aimed at promoting small business investment in equipment, land and buildings. SBA 504 loans intended to help small businesses grow and expand their payrolls by supporting real estate purchases would increase to a maximum of $5.5 million. And by increasing the maximum loan size of SBA microloans from $35,000 to $50,000, the administration is hoping to boost startups and smaller enterprises.
As the Administration has noted, the average weekly SBA loan volume is up currently over 70% over the past year with the group providing more than $13 billion in small business loans since February 2009.
In the third part of the plan, the President plans to call on treasury secretary Timothy Geithner and SBA's Karen Mills to convene a conference of regulators, Congressional leaders and business owners to explore additional strategies the government can take to help small businesses access the credit.
"Over the past decade and a half, America's small businesses have created 65% of all new jobs in the country," Obama said at the warehouse storage facility. “These companies are the engine of job growth in America. They fuel our prosperity. And that's why they have to be at the forefront of our recovery."
The announcement of the new small business initiative comes during growing discontent over a recent announcement regarding what some view as excessive Wall Street bonuses.
A fact sheet on the President’s Small Business Lending Initiative can be viewed here.