President Obama Wednesday introduced a plan to help get more credit flowing for small business and help businesses with fewer than 200 employees climb out of the recession and begin hiring again.
Under the latest Obama plan, community banks with less than $1 billion in assets will be able to borrow from the Treasury Department’s Troubled Asset Relief Program (TARP) at a rate lower than that of other financial institutions, if they can demonstrate plans to pass those savings on to small businesses in the form of more-favorable loans. According to the administration, most business loans by these community banks go to small business, according to the New York Times.
“Our goal is to conduct a widespread consultation with the small business and small bank community for a few weeks, and get this operational as quickly as is practical,” Gene Sperling, senior counselor to Treasury Secretary Timothy Geithner said.
Banks will be required to file quarterly reports on their efforts to provide money to small businesses.
Small and medium-size businesses (SMBs), which employ more than half the American workforce, are struggling to find credit as banks tighten loan standards. Tight credit is especially hard on SMBs, which rely more heavily on loans than enterprise-class businesses.
(Image by Omar Omar via Flickr, CC3.0)
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