subject: Obama Small Business Loan Program, Part 1. Is It Really Coming? [print this page] As small business owners are struggling in the trenches to keep alive in this troubled economy, you may be reluctant to find too much solace in the promises from Washington. After all, we have heard it all too oftenthe rhetoric about how small businesses will drive the economy, but not offering any capital to do it. After the persistent wind from Washington ebbs, we return to our stores and offices still meeting capital to get us through the day. But I have some good news. There has now been a significant shift in the Obama administration and they are really trying to do something about it. No, I'm serious.
First a little history. At a town hall meeting in New Hampshire on February 14, 2010, Obama first proposed using 30 billion of the remaining TARP monies, including monies already repaid by tbig banks, to loan directly to smaller community banks who in turn, are you ready for this, would loan to us. Nice try. They never got out of the proverbial gate. Congress reacted negatively, comparing this to a perpetual TARP piggy bank where big banks would return over and over to the feeding trough for more cheap giveaways. And even worse, the recipient community banks did not want the stigma of receiving monies that were tied to a Wall Street bailout. This same idea was laid before us like a small business banquet in the President's State of the Union address, but still no one was taking it seriously in the House or Senate.
Oh well, time to re-tool the proposal. And that is exactly what the Treasury Department did, in its new TARP-Free redo bill. Enter new legislation proposed by Obama on May 13, 2010 under HR 5302, known as the State Small Business Credit Initiatives Act of 2010. Here is how it works in a nutshell.
Instead of using TARP monies, there will be fresh Federal funding paid to State redevelopment agencies (greatmore money to government agencies to waste). Those states will be empowered to loan money to insured depository banks and credit unions (in other words, the typical community bank on main street) at low interest rates, who will then loan the money to small businesses.
In principle, it is a good idea. In the next article, I will describe the details of the program. But while we are waiting for Congress to entertain just one creative thought, let me tell you about a small business loan program that is working now and actually making funds available. It is the U.S. SBA Community Express Loan Program. This gives unsecured small business loans between $5,000 and $25,000 with very little paperwork, answers typically in two days, interest rates presently at 7.75%, funding in two weeks, and monies wired directly to your business account. There are still lenders participating in this program. So the meantime, at least we have a source of ready capital. Good luck.
