The Wall Street Journal
By: Jared A. Favole
May 25, 2010
WASHINGTON--President Barack Obama urged Congress Tuesday to pass legislation that would create a $30 billion fund to incite banks to extend credit to small businesses.
Mr. Obama outlined the proposal in February and it is part of a broad effort by the administration to spur small-business growth amid a lending slowdown caused by the economic downturn. Such efforts include several tax breaks and changes to Small Business Administration lending programs.
The legislation will help the government "knock down the barriers that prevent small-business owners from getting loans or investing in the future," Mr. Obama said while speaking in the White House Rose Garden Tuesday.
The $30 billion would come from the Treasury Department and would go to small, community banks that want to increase small business lending, said Gene Sperling, counselor to Treasury Secretary Timothy Geithner, in a conference call. Mr. Sperling said preliminary estimates from the Congressional Budget Office suggest that the fund won't cost taxpayers money in the long run, though it may cost some in the first few years.
The money would go to small banks which in turn would have to pay sliding-scale interest on the money depending on the amount of credit they lend to small businesses above 2009 levels. Banks that increase lending above certain 2009 levels would pay interest of 1% while those that don't could pay 9%.
Mr. Obama also used his remarks to say the SBA has been doing everything it can to help workers and businesses hurt by the Gulf oil disaster. "From the very beginning of this disaster, the SBA has acted quickly to assist fishermen and fishing-dependent small businesses," he said.
Mr. Obama said the SBA has offered low-interest loans and deferrals of existing loans. Still, Mr. Obama said, businesses are encouraged to file claims with BP PLC, the energy company which operates the well that is spitting thousands of gallons of oil off the Louisiana coast.
The push for the House and Senate to act on Mr. Obama's proposal comes after a government panel reported a few weeks ago that the administration's $700 billion financial bailout may not help small-business growth. The panel also noted in its report that the government's efforts to stabilize the financial sector haven't increased small-business loans.
Mr. Obama made his remarks while hosting small-business owners of the year from Maine and Delaware.
Some parts of Mr. Obama's proposal passed a House committee last week and the Senate has begun work on the issue, Mr. Obama noted. He urged swift passage of the package.
"This is an issue of putting our government on the side of the small-business owners who create most of the jobs in this country," he said. He added, "It's about unleashing the great power of our economy, and the ingenuity of our people."