President Barack Obama has announced a set of initiatives aimed at kick-starting the market for small-business loans.
To provide more access to credit for small businesses, the administration plans to seek legislation to increase the maximum size of three types of Small Business Administration loans. The maximum size for 7(a) loans will increase from $2 million to $5 million to help small businesses invest in machinery, equipment, land and buildings. The maximum size of 504 loans will expand to $5.5 million to help small businesses grow and expand their payrolls by supporting real estate purchases. SBA microloans will go from a maximum of $35,000 to $50,000 to give a boost to start-ups and other smaller businesses.
A new initiative will also support small-business lending by providing lower-cost capital to small banks that offer small-business lending plans and to community development financial institutions that lend to small businesses in the hardest-hit rural and urban areas. Treasury Secretary Tim Geithner and SBA Administrator Karen Mills will convene a conference of regulators, congressional leaders and small-business owners to establish further steps the government can take to help small businesses access credit.
The administration noted that it has already taken several important steps to get credit flowing again to small businesses. Compared to the depths of the recession, average weekly SBA loan volume is up over 70 percent and SBA secondary markets have returned closer to historical levels. In total, SBA funding has supported nearly $13 billion of lending since the American Recovery and Reinvestment Act was enacted on Feb. 17.
There's no question that the steps weve taken have improved the overall climate for small businesses across the country, but there is more we need to do, said Obama.
In line with the White House initiatives, the House Committee on Small Business has approved legislation to modernize the SBAs capital access initiatives. This bill is expected to support $44 billion in small-business lending every year, helping to save or create 1.3 million jobs annually, said committee chair Nydia Velázquez, D-N.Y. I look forward to swiftly moving this legislation through the House and working with my colleagues to get this bill to the president for his signature.
