Turning its attention from the troubles of Wall Street banks to bolstering the fortunes of Main Street businesses, the Obama Administration announced on Mar. 16 a three pronged package intended to help small businesses. The program includes a $730 million chunk from the recently passed economic stimulus plan to reduce lending fees while increasing government guarantees on a portion of Small Business Administration loans up to 90%. It also seeks to increase bank liquidity by injecting $15 billion into banks to thaw the credit market and boost lending to small businesses.
Under the plan, the government hopes to jump-start credit markets for small business by offering to purchase securities pooled from the Small Business Administration's Community Development Loan Program. Other measures in the plan include new reporting requirements for banks on lending to small business, extending the loss carryback provision for small businesses to up to five years.Treasury Secretary Timothy Geithner said that the lending reporting requirements will require the 21 largest banks receiving federal bailout money to report how much small lending they do on a monthly basis. "We need every bank in the country to do everything in their power to provide the credit that small businesses need to operate, expand, and add jobs," Geithner said. "You need to make the extra effort to make sure that good loans are getting to creditworthy small businesses in order to serve the larger public good of moving this nation towards recovery. And given the role many banks played in causing this crisis, you bear a special responsibility for helping America get out of it."
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