The Treasury Department and the Small Business Administration convened a Small Business Financing Forum in which they discussed ways to expand credit to small business.
One the most prominent ideas broached at the conference was to use more of the money left over from the Troubled Asset Relief Program, or repaid by the banks, to help finance small businesses.
As the financial system has stabilized, banks have repaid the government more than $70 billion, said Treasury Secretary Tim Geithner. We have earned more than $12 billion from those investments. And we are now in the process of winding down and terminating some of the extraordinary government programs put in place last fall.
Geithner pointed out that the Recovery Act, which was passed in February, provided $100 million in support for community development financial institutions and an additional $3 billion in New Market Tax Credit investments to support small businesses to help struggling communities. So far, 26 CDFIs have applied for TARP funds. President Obama recently announced that TARP funds would also be available to credit unions.
But speakers at the forum pointed out that they were still facing challenges, including in the Mississippi Delta area and Kentucky. There are always going to be rural opportunities and rural businesses to address, said Ray Moncrief of the Kentucky Highlands Development Corp., adding that rural entrepreneurs also need more help with accounting expertise. SBA weekly loan volume is up more than 75 percent since the beginning of the year, but small businesses are still facing a very challenging credit environment.
Counseling and technical assistance are essential, said SBA Administrator Karen Mills. We have small-business counseling centers, and over the long term we see better revenue for those businesses. She plans to connect the SBA counseling efforts more to access to capital.
Sen. Sherrod Brown, D-Ohio, called for increasing loan limits andmicroloans, especially to hard-hit manufacturing businesses. If we canfind ways to inject TARP money into community banks, this can reallymatter for producing the kind of jobs that will get our economy back ontrack, he said.
Geithner urged more banks, large and small, to expand lending to small business. We need banks to be working with us, not against recovery, he said. Banks bear some responsibility for the extent of the damage caused by the crisis, and you carry a substantial obligation to help our communities get back on their feet.
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