President Obama and Treasury Secretary Timothy Geitner announced Monday that $15 billion of the Troubled Asset Relief Program (TARP) will be committed to the Small Business Administration (SBA) so that the government can purchase SBA-backed loans from the banks that have originated them. The SBA FAQ is here. SBA lending has crashed with all other lending lately, and this initiative is aimed at increasing the credit available to small businesses.

SBA loans generally are offered to small businesses that can’t get loans through normal lending channels. The SBA guarantees the loans to local lending institutions. Clearly, small businesses are the backbone of the American economy. They provide much of our jobs, growth and wealth.

Will directing funds to guaranteeing small business loans really help these small businesses who need it the most? Many commenters to the Washington Post and Business Week stories on this initiative are leery. The Wall Street Journal claims these loans help the wrong kinds of businesses; most growth and jobs will come from “knowledge” businesses such as engineering firms, software development, consultants or biotechnology, while SBA funding is difficult to obtain for these types of companies without inventory, equipment, real estate or other tangible assets.

Many small business owners are more concerned about the hidden impact of proposed new taxes on health benefits, energy and income.

What do you think? What do small businesses need now from the government and the rest of us?

(originally posted at NCLawLife.com)

Tags: Business Week, cap-and-trade, SBA, Small Business Administration, TARP, taxes, Troubled Asset Relief Program, Washington Post

This entry was posted on Wednesday, March 18th, 2009 at 12:13 pm and is filed under bailout, business lending, economy, finance, recovery, stimulus. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.