Obama launches plan to help small businesses get loans

[sabra]

Source: Biz Times

President Barack Obama today will announce new efforts to help American small businesses, including proposals to boost limits on government loans and to make it easier to gain access to funds from the Troubled Asset Relief Program (TARP).

Obama is scheduled to visit a records-storage company in Maryland this afternoon to make the announcement.
He will ask Congress to increase the maximum size of three types of Small Business Administration (SBA) loans to make it easier for struggling companies to get credit.
"Our small businesses have been some of the hardest hit by this recession," Obama said in a statement on this morning. "There's no question that the steps we've taken have improved the overall climate for small businesses across the country, but there is more we need to do."

Through the TARP, the White House also will make it easier for community banks to lend to small businesses. The Obama administration plans to reduce the 5-percent dividend that financial institutions must pay to the government to 3 percent. The program will be open to banks with less than $1 billion in assets.

Obama is seeking to boost the maximum size of the SBA's 7(a) loans from $2 million to $5 million, to help businesses buy machinery, buildings and other capital equipment.

He also wants to raise the limit on the SBA's 504 loans to $5.5 million to help support businesses' real-estate purchases and is aiming to boost the maximum size of microloans to $50,000 from $35,000 in order to help start-up firms.

Read more: http://www.biztimes.com/daily/2009/10/21/

[Autumn]

1. This is an excellent use of

the TARP funds and will actually benefit Americans.

[theoldman]

2. What small businesses need most of all is customers.

You can reduce their taxes and provide them with low interest loans but if they do not get more customers their business will not expand. Until the job market improves and people have more money to spend you will not see any change.

[Demeter]

4. Exactly So

[Beetwasher]

6. This Will Create Jobs, People W/ Jobs Become Customers

Business will take out loans to hire people.

[theoldman]

7. Too much common sense here.

We can never become politicians.

[timo]

10. common sense says NO

if you have to take out a loan to make payroll, your not gonna get very far.

[Beetwasher]

11. You Don't Have A Fucking Clue

Business DO all the time take out short term loans to make a payroll when they know some billing/big sales are going to come in soon thereafter. Or if they really think additional staff will DRIVE more sales etc.

You seriously don't have a fucking clue.

[timo]

12. wow

how about you use some more hateful language? I disagree, you may have a revolving line of credit that your working with but its not just taking out a loan to make payroll, from a bankers perspective if you have to have a government garauntee for a loan, its iffy at best, small business can borrow all the money in the world, but if the economy is down and the customer and sales just are not there what good will it do? In a weak economy hiring more sales staff and doing it on borrowed money isnt making a lot of good sense...these are my opinions.

[Beetwasher]

13. You're Opinion Is Wrong

And is not common sense, not at all.

I've worked for business that took out short term loans to make payroll and are doing just fine. We knew we were going to collect next month and took out a short term loan to make payroll this month. This is very, very common.

If you feel the econonomy is picking up and an extra sales guy will help you secure more orders, you take out a short term loan and hire a new sales guy. These loans are HARD to come by currently and what O is doing will help business a GREAT deal in securing these loans. This sort of lending WAS very common AND very helpful and DOES and WILL create jobs.

[timo]

14. well we just disagree

wonder how many of the "to big to fail" companies used this type of credit to fuel rank growth and got caught up in the debt snowball when things took a turn for the worse? or even smaller companies like retail chains that are now tits up? working for a companie and owning running one are 2 very different things

[Beetwasher]

17. Wow how can you post such nonsense?

Ummm, it's well known that they failed because they speculated and leveraged heavily on risky garbage like CDO's. Seriously, you really don't know what you're talking about. This sort of program being proposed is a job machine. You can disagree but you're wrong. And emperically so.

[timo]

18. time will tell

We will see, I just doubt its going to be the "job machine" that you say it will be. this practice of ordering the omlette before the egg is laid is some of why we are where we are, too much capital and no demand is a recipie for disaster, AGAIN!!!!
sba loans are defaulting at 12% or higher, thats just the tip, so the government is now paying off 90% of whats owed on those defaults....people who used sba loans to get a franchise like quiznos (top defaulter for 08) cold stone creamery, curves for women, dominos etc...these small business flops were not leveraged on risky garbage, just a bad timing a bad economy and bad business plans...mainly like depending on a loan, and not having enough of their own capital invested in the venture, in other words depending tooooooo much on credit.

[Beetwasher]

19. Time Has Already Told

This ain't exactly a new concept. It works. Period.

[timo]

20. except

it didnt, just like I pointed out with all the franchise type owners who went tits up because they had loads of credit extended to them and when a rough spot in the road came along and sales were soft, the bank still wants its payment every month, but if no customers are coming in because the economy is soft, the note still has to be paid, so you get the massive default o rama....extending more credit in a bad economy is just loading more bad debt on the backs of a broken system, when sba's go bad and are charged off the tax payer eats it,

[Beetwasher]

22. Bullshit

Small business CANNOT GET CREDIT NOW. What part of that escapes you? Without credit they are more likely to fail than if they CAN get credit. Holy crap. It's a simple fucking concept and IT WORKS.

[timo]

21. timo

The problem is that in the best of times, SBA loans have been abused by bankers as a vehicle to cure past bad decisions. In reality, as a loan officer, if the loan can be made, it shouldn't need the crutch of an SBA guarantee. It was laughable to see the government read from a sheet and comment on 7(a) and 504 loans, with no comprehension with what they want to pump billions into. 33% of new businesses FAIL, due to lack of capitalization, how is just putting lipstick on a pig going to help.

[Beetwasher]

23. Good Fucking Grief

Yeah, a shitload of small business fail REGARDLESS. But now EVEN MORE are failing BECAUSE THEY CAN'T GET CREDIT.

Lines of credit are ESSENTIAL for the success of ANY small business. That is FACT. Period.

You are totally clueless.

[timo]

24. right

yup clueless, keep on keeping on beetwasher. thats why the turnover rate on these sba"s is so high, and then the taxpayers get stuck with the bill, most small business fail because the RELY TO HEAVILY ON CREDIT!!!

[Beetwasher]

25. Yeah, It Is Right

Most small businesses fail because it's not easy to start and keep a small business going. Period. Which is why they need all the help they can get, including credit lines, especially in a shitty economy.

[timo]

26. soooo

your saying that dumping a bunch of money out, letting people who shouldnt be in business get it, a few will do ok, most will flop, and the banks get paid off on the default by tax dollars, thats a winning solution? thats your answer? have you ever looked at the sba history? take a good example of the sba disaster loans surrounding 911, rampant default, and fraud abound who picks up the tab? the taxpayer, this is just not a sound financial plan, most banks dont even like handling sba loans anymore because of the massive amounts of paperwork involved and dealing with the huge amounts of defaults, you can loan billions of dollars out to small, medium, and big business, if the consumers dont have the inclination to buy the goods these companies sell, the notes still have to be paid, your just shuffling debt around..........by loaning people money who wont be able to repay it..do you really think thats a good idea? then they get stuck with a bad note, the government pays the bank and who but the bank wins?

[DBoon]

16. small businesses and their employees will spend this money

in the real economy, as opposed to hoarding it or sending it offshore

Taking a loan to meet payroll is certainly better than letting go of employees

[girl gone mad]

8. And less debt.

However, if businesses can roll over high-interest debt to these low-interest government loans, the program might do some good. At the same time, it would put more stress on our zombie banks and cc companies. What a tangled web we weave..

[Soylent Brice]

3. K&R

[Beetwasher]

5. This Is Stimulus Part II, This WILL Start Creating Jobs!!

Good move.

Repubs are going to be in a serious spot come '10 when the stimulus really starts kicking in and jobs really start to pick up.

[SpartanDem]

9. Much better use for TARP

[Vidar]

15. Far better than bailing out predatory banks.