Will TARP Soon Cover Small Business?
Opinions expressed by Entrepreneur contributors are their own.President Barack Obama's small business rescue plan, which has been around for more than a year, came back into the spotlight Wednesday, when Obama announced three specific proposals aimed at funneling more loan money to small businesses.
The big questions: Can he get these initiatives passed anytime soon? And if so, would it help?
While big banks got billions in Troubled Asset Relief Program (TARP) funds in the past year, little of those funds were used for small-business lending. Instead, small business has been caught in an unprecedented lending and credit crunch for two solid years.
The new initiatives aim to change that by:
Ã¢Â€Â¢ Granting community banks with less than $1 billion in assets new power to borrow at a lower rate -- 3% instead of the 5% currently offered. In return, participating banks would be required to submit a lending plan demonstrating how they will use the funds to expand their small-business lending.
Ã¢Â€Â¢ Increasing the lending limit on major SBA-guaranteed loan programs from $2 million to $5 million. SBA's micro-loan program would also expand its limit, from $35,000 to $50,000.
Ã¢Â€Â¢ Also calls for the convening of a Treasury Dept.-SBA small business lending conference, to work on ensuring small businesses have access to credit.
The National Small Business Association weighed in immediately with its opinion that time is of the essence in passing these type of reforms, and that more needs to be done to make sure banks increase their small business lending.
Most of this we've heard before, and bill drafts for them have been introduced before. And were introduced again Wednesday, by Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu (D-La.)
Can Obama get this done? If so, is it too little too late? Or would it help your business? Voice your opinion in the comments below.