The president also stated that 21 of the largest banks receiving federal bailout money under the Troubled Assets Relief Program will have to check in with the government monthly regarding their small-business lending efforts.
"Small businesses are one of the biggest drivers of employment we have," Obama said today. "This is going to be a first step" to help entrepreneurs.
The administration's move, implementing the Reinvestment and Recovery Act, will increase federal backing of SBA-guaranteed loans from previous levels of 75 and 85 percent, depending on the loan amount, to 90 percent across the board. The plan also waives fees--up to $75,000--that borrowers usually pay for the loans.
"By increasing to 90 percent the amount of a loan that the SBA can back, we will also reduce risk for lenders and give them a direct incentive to lend to small businesses," states Rep. Nydia M. VelÃƒÂ¡zquez (D-N.Y.), chairwoman of the House Small Business Committee.
"Just three weeks after its passage, the president is moving forward swiftly to implement the small business lending provisions in the Recovery Act," she states. "I applaud the president for working quickly. His efforts send a clear message to entrepreneurs across the country: you are central to our economic recovery strategy."