White House to Help Small Business
WASHINGTON - On Monday morning President Barack Obama unveiled a plan to help free up Small Business Administration loans. The Treasury Department will purchase secondary market securities that have frozen the lending of Small Business Administration loans. "My recovery plan," the President stated, "raises the guarantees on SBA loans to 90 percent and eliminates costly fees for borrowers and lenders that can be too costly in a recession." He continued, "The Treasury Department will begin purchasing up to $15 billion of SBA loans through the Troubled Asset Relief Program, or TARP. We will immediately unfreeze the secondary market for SBA loans and increase the liquidity of community banks."
Matt Shay, president of the International Franchise Association, representing some 1,250 franchisors and 500 vendors, said, "The announcement today of direct intervention in the small business secondary loan market is the missing piece of the small business lending puzzle." He went on to say that the low level of credit available has made it difficult for small businesses.
Shay said that an IFA analysis estimates that lending to franchises could fall by as much as 40 percent in 2009, limiting the industry’s capability to develop new businesses, which in turn provides more jobs and more economic output. “Hopefully, the actions announced today will help slow this expected decline in investments,” Shay said.
U.S. House Representative (Ga.) and Republican Study Committee Chairman, Tom Price, was highly critical of Obama's plan. He stated, "If President Obama really wants to help small businesses, he won’t tax away their viability." He continued, "This aid package makes for a nice media opportunity, but it does not make up for the fact that the President is putting the largest tax hike in American history on the backs of small businesses across the country."
