With small business lending at a virtual standstill, the Administration is trying to jumpstart the credit markets by taking certain actions announced on March 16. Actions include:
- Purchasing up to $15 billion in securities so lenders will have more funds available for new loans,
- Raising temporarily the SBA loan guarantee under the 7(a) loan program to 90% (up from the usual 85% for loans up to $150,000 and 75% for larger loans),
- Eliminating SBA loan fees (including rebating fees paid on loans approved on or after February 17th), and,
- Requiring the 21 largest commercial banks to report each month on their small business lending activities.
These measures are welcome moves in a tough economy and will surely prime the pump of the lending activities. But it’s important to recognize that they only benefit small businesses seeking capital.
What about other small businesses that do not need financing? What measures will help the entire small business community?
Many small business owners, especially those “larger” small businesses that create jobs, are concerned about other issues that could seriously impact them, including tax increases and additional costs for health coverage.