Obama to unveil proposals to help small businesses

[Pirate Smile]

Source: Associated Press

WASHINGTON – Amid misgivings over his spending blueprint, President Barack Obama has decided to provide billions of dollars in federal lending aid aimed at struggling small business owners.

The broad package of measures to be announced Monday includes $730 million from the stimulus plan that will immediately reduce small-business lending fees and increase the government guarantee on some Small Business Administration loans to 90 percent. The government also will take aggressive steps to boost bank liquidity with more than $10 billion aimed at unfreezing the secondary credit market, according to officials briefed on the plan who demanded anonymity to avoid pre-empting the president's announcement.

"It's a huge step in the right direction," Giovanni Coratolo, director of Small Business Policy at the U.S. Chamber of Commerce, said Saturday. "In this economy, having the least amount of risk for banks will incentivize banks to lend to small businesses. A lot of small businesses will benefit from this."
Obama will announce the new measures with Treasury Secretary Timothy Geithner at the White House.

-snip-
The new measures taking effect Monday focus on opening up small-business lending that is seen as critical to community growth. While the SBA typically guarantees $20 billion in loans annually, new lending this year is on track to fall below $10 billion, according to the administration.
The centerpiece of the administration's plan is boosting liquidity by restoring the frozen secondary credit market for SBA loans. Often primary bank lenders will seek to sell the SBA loans in the secondary market, allowing them to use the proceeds of the sale to make new loans to other small business owners, but skittish investors have been staying away.

Under the administration's new initiative, the government will step in to buy these loans to help unlock the frozen credit market, using money from the recently passed bailout package in the range of between $10 billion to $20 billion, one official briefed on the plan said.




Read more: http://news.yahoo.com/s/ap/20090315/ap_on_go_pr_wh/obama_small_businesses;_ylt=AlFkEAqu1AC8V.4cjvagT76yFz4D

[ixion]

1. beware of tying your business to the SBA and their "loans"

because not only is the paperwork required to get a loan out-of-hand, but then the SBA owns you and can call their loan in whenever they feel like.

My mother lost a business of hers to the SBA once, back in the 80's, so I speak from first hand experience.

[jimmil]

3. Its not necessarily the SBA but rather everything else that goes with it.

I had to have a $1m insurance policy on myself. That was $600/mo. Accident/liability insurance was so costly at $5500/mo. Workmans comp was $2000/mo. Structure insurance was another $500/mo. I could go on. It boiled down to my actual payment for my building was $5K a month but all the required insurance and taxes required me to bring in $30K a month before I made a dime. That is what kills new businesses.

[VermeerLives]

6. Sounds like quite a few strings attached to this

Yes, taxes kill businesses, and not just the big ones.

[antimatter98]

2. Obama should just hand over a trillion or two to small business--like he did the banks.

Tired of the open door for the banks, but when it comes to
Main Street, lots of hand-wringing, proposals, 'ideas,' debate, etc.

Seems that our actual people, citizens, small business owners, are getting
crushed while the banks and giant corporations are just handed trillions (11 by some
counts, including Bloomberg) and told 'have fun.'

Something is very wrong here. It's as if the sea walls fail, the town is
flooded, people flee and have nowhere to go, and then the government hands
billions to consultants to 'study' why the walls failed, but nothing for the
displaced. Oh, wait, that was Katrina.

[freemarketer6]

4. I feel the same. The amounts of money talked about here is

so puny it's embarrassing. It would appear that help to small business is merely being implemented as a ruse.

[ixion]

5. a ruse... lip service...a token gesture

take your pick. That's what citizens and small business can generally expect.

[Flora]

7. Ok..... I'm not getting this..

While I'm all for helping small business, I'm confused with the ability to just pull hundreds of millions from the "stimulus".

I thought, in my innocent little brain, that when the dollar amount for the stimulus bill was decided upon, it was based on the amount needed for preconceived projects.

So... how does this work?

[Abq_Sarah]

8. I certainly can't speak for all small business owners

Merely myself but I do NOT need a "loan". What I need is customers with money in their pockets to buy my product/service.

I wish just once we'd get a President who had run a small business and who knew what it was like to have to send money to the treasury every single month before our customers even paid their invoices. Someone who had to face paying that workers comp bill not knowing if he was going to have enough business to cover the cost. Payroll, rent, utilities, taxes, insurance.... those are all paid before I receive ONE cent. A sizable chunk of my gross is paid out to agencies that do not increase my income in any way. And with the threatened cap and trade legislation, we can expect higher taxes, albeit hidden vs direct. None of this saves one freaking job in my town or helps to create a job that is lost when a business owner just says "screw it, I'm done".