Capital Hill

Democrats Push Small-Business Loans, But Do Firms Want Them?
By David Hogberg   
Wed., May 19, 2010 2:09 PM ET

The House Financial Services Committee will vote today on a bill to create a $30 billion “Small Business Lending Fund Program.” Introduced by Chairman Barney Frank, D-Mass., it would let the Treasury give capital to smaller banks ostensibly for the purpose of providing credit to small businesses. President Obama floated a similar idea in February, using $30 billion in TARP funds. Frank is not using TARP funds in his bill and has not yet stated where the money will come from.

Obtaining loans and lines of credit from banks can be crucial for small businesses’ survival and growth. Small firms can’t tap capital markets, and the community banks they rely on are still reeling from commercial real estate losses and other bad debt.

But would this bill really help? At Tuesday’s hearing on the bill, some witnesses cited a Congressional Oversight Panel report as evidence that the bill would help small businesses (specifically, see the testimony of Christian Johansson, Jim Determan and Dan Mica.)

But it appears that those witnesses only paid attention to the executive summary. Page 5 isn’t exactly an endorsement of a Small Business Lending Fund:

The program would require legislative approval, and even if it is established by Congress immediately, it may not be fully operational for some time. It could arrive too late to contribute meaningfully to economic recovery. Moreover, banks may shun the program for fear of being stigmatized by its association with the TARP, or they may wish to avoid taking on SBLF liabilities at a time when their existing assets, such as commercial real estate, remain in jeopardy. The SBLF also raises questions about whether, in light of the (Capital Purchase Program’s) poor performance in improving credit access, any capital infusion program can successfully jump-start small business lending.

More fundamentally, the lack of small-business loans may reflect weak demand rather than tight credit. The panel’s report noted that small-business demand for loans continues to fall, with a net 9.3% of banks reporting a decline in the latest Federal Reserve senior loan survey. Meanwhile, the National Federation of Independent Business has consistently stressed that its members are more worried about sales than access to credit.

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AlyceKIM  - respond   |08-18-2011 06:22:48
Don't you acknowledge that this is correct time to get the mortgage loans, which
will make you dreams real.
MarthaGonzalez  - Democrats Push Small-Business Loans, But Do Firms   |02-11-2011 03:25:04
Obama said the incentives will help small businesses right away.Obama said
small businesses are "the anchors of our Main
Streets," creating most of the
jobs in the
Thanks, Martha, Job Search Expert from link:
MarthaGonzalez  - loans to small businesses   |01-25-2011 05:47:42
Obama said the incentives will help small businesses right away.Obama said small
businesses are "the anchors of our Main Streets," creating most of the
jobs in the country.
Thanks, Martha, Job Search Expert from resignation letter
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