Obama Administration's Funds for Connecticut, Missouri, and Vermont to Spur at Least $534 Million in New Small-Business Lending, Help Create Jobs

Today, the U.S. Department of the Treasury announced approval of State Small Business Credit Initiative [SSBCI] applications from Connecticut, Missouri, and Vermont. The planned use of SSBCI funds by these states will help create new jobs, and is expected to spur more than $534 million in additional small-business lending. The SSBCI program, which supports state-level small business lending programs, is an important component of the Small Business Jobs Act that President Obama signed into law last fall.

"These critical funds will help small businesses access the capital they need to expand their operations, create new jobs, and continue supporting our nation’s economic recovery," said Treasury Secretary Tim Geithner [pictured]. "Public-private lending partnerships, such as the State Small Business Credit Initiative, have a proven track record of success, and I’m pleased that this funding is on its way to support economic growth in these states."

Under the SSBCI, all states are offered the opportunity to apply for federal funds for state-run programs that partner with private lenders to increase the amount of credit available to small businesses. States must demonstrate a reasonable expectation that a minimum of $10 in new private lending will result from every $1 in federal funding. Accordingly, the $1.5 billion federal funding commitment for this program overall is expected to result in at least $15 billion in additional private lending nationwide.

Details on the applications approved today -- which the states expect will generate a cumulative total of at least $534 million in new small-business lending in Connecticut [$133 million], Missouri [$269 million], and Vermont [$132 million] -- are included below.

Geithner announced the approval of this latest wave of SSBCI applications during a conference today at the Treasury Department entitled, "Access to Capital: Fostering Growth and Innovation for Small Companies." The conference brings together policymakers, entrepreneurs, investors, academics, and other market participants to explore how both the public and private sectors can help promote access to capital at each stage of growth for a small business -- from seed capital, to growth equity, to accessing the public markets.

Treasury has previously approved funding for SSBCI programs in California, Michigan, and North Carolina. Additional applications are expected to be approved in the coming weeks. For more information about the SSBCI, please visit http://1.usa.gov/SSBCI.

Connecticut: At Least $133 Million in New Small-Business Lending
With SSBCI approval of Connecticut’s application, can access up to $13.3 million in SSBCI funding -- which Connecticut expects to generate more than $133 million in new small-business lending in the state.

"Connecticut's economic recovery is driven by small businesses and their strong plans for growth," said Connecticut Governor Dannel P. Malloy. "We need to ensure they have the capital necessary for hiring, purchasing of machinery and equipment, and expansion of facilities in our state. In partnership with the banks and the Connecticut Development Authority, Connecticut's small-business owners will now have more resources for that growth."

Connecticut’s approved plan dedicates its $13.3 million in SSBCI funding to support its Capital Access Program [CAP], which provides loan portfolio insurance to encourage private financial institutions to lend to creditworthy small businesses. Connecticut has administered its CAP for more than 19 years. During this period, it has provided portfolio insurance for about 630 enrolled loans, totaling over $53.4 million -- resulting in the creation of, or saving of, 6,120 jobs.

Missouri: $269 Million-Plus in New Small-Business Lending
With SSBCI approval of Missouri’s application, Missouri can access up to $26.9 million in SSBCI funding, which it expects to generate more than $269 million in new small-business lending in the state.

"Along Main Streets in every corner of Missouri, small businesses are a critical force for creating jobs and growing our economy," Missouri Gov. Jay Nixon said. "These new resources will help Missouri entrepreneurs grow their operations, and turn their dreams into bricks and mortar.

"We appreciate the leadership shown by President Obama and Secretary Geithner in providing these resources for our state, and we will invest these tools wisely and strategically in businesses that will transform Missouri’s economy for the 21st Century."

Missouri’s approved plan dedicates $16.9 million of the state’s SSBCI funding to establish the high-tech Missouri IDEA Seed and Venture Capital Funds [IDEA Funds]. IDEA stands for Innovation, Development and Entrepreneurial Advancement.

The Missouri IDEA Funds promote the formation and growth of businesses that engage in the transfer of science and technology into job creation. The funds provide financing to eligible businesses through four components that correspond to the four stages of venture growth: 1] pre-seed capital stage financing; 2] seed-capital stage financing; 3] venture-capital stage financing; and 4] expansion-stage debt.

Collectively, these four components will provide financing opportunities throughout the process that entrepreneurs call the "continuum of capital." In this way, the funds will support new venture formation and growth all the way from research and development to commercialization.

Missouri’s approved plan also dedicates $10 million of SSBCI funding to the Grow Missouri Loan Participation Fund. That program supports the formation and growth of businesses in the industrial, commercial, agricultural, and recreational sectors. It provides loans of up to $3 million to businesses with under 500 employees to help attract new enterprises and expand existing companies.

Vermont: More Than $132 Million in New Small-Business Lending
With SSBCI approval of Vermont’s application, Vermont can access up to $13.2 million in SSBCI funding, which it expects to generate more than $132 million in new small-business lending in the state.

"This $13.2 million in federal small-business funding is terrific news for Vermont," declared Vermont Governor Peter Shumlin, "and it would not have been possible without the strong advocacy efforts of our Congressional delegation.

"We thank Sen. Patrick Leahy, Sen. Bernie Sanders, and Congressman Peter Welch for their efforts, and also thank the U.S. Department of the Treasury for this well-timed award. With the help of Vermont’s private-sector leverage, these federal funds will go far, giving our small businesses the critical boost they need to create jobs for Vermonters."

Vermont’s approved plan dedicates $1 million of the state’s SSBCI funding to support its Financial Access Program [FAP], which provides loan portfolio insurance to encourage private financial institutions to lend to creditworthy small businesses.

The remaining $12.2 million is allocated to three additional programs:

* Vermont has allocated a total of $5.9 million to its Commercial Loan Participation Program, which provides financing for the purchase of land; construction and renovation of facilities; and purchase and installation of equipment for eligible projects.

* Vermont has allocated $3.0 million to its Technology Loan Participation Program. This initiative supports loans to early-stage firms, primarily in the information technology and bioscience sectors.

* Vermont has also allocated $3.3 million to its Small Business Loan Program, which finances smaller commercial businesses’ fixed asset and working capital needs.

GoodBiz113's Take
Once again, the Obama Administration has taken bold and positive steps to fuel small-business growth and create jobs. Current and would-be small-business owners in Connecticut, Missouri and Vermont -- and their myriad stakeholders -- are fortunate that Secretary Geithner and his advisers have exercised their fiduciary pragmatism and wide-angle vision to promote far-reaching entrepreneurship and economic development in their states.

SOURCES: Connecticut Development Authority, Missouri Department of Economic Development, U.S. Department of the Treasury, Vermont Economic Development Authority

____________________

Business Proposals: It's All About Trust. ^AF

Sens. Klobuchar and Franken Join Call for Help to Small Businesses; Letter to Treasury Secretary Tim Geithner Signed by 18 Democratic Senators

This week, Sens. Amy Klobuchar [D-Minn.] and Al Franken [D-Minn., pictured] joined 16 of their colleagues to call on U.S. Treasury Secretary Timothy Geithner to take immediate steps to utilize TARP funding to stabilize community banks and improve credit availability for small businesses.

“The American economy won’t recover until our small businesses recover,” said Sen. Klobuchar. “Small businesses are the engines that drive job creation in this country. Opening up credit and expanding into new markets will spur economic growth and strengthen our economy.”

“Credit for small businesses is crucial to the American economy and essential for getting us out of this recession,” said Sen. Franken. “Minnesota businesses shouldn’t continue to suffer because banks on Wall Street are unable to manage their balance sheets.”

Joining Sens. Klobuchar and Franken in sending the letter were Senators Patty Murray [D-Wash.], Patrick Leahy [D-Vt.], Carl Levin [D-Mich.], Jeff Bingaman [D-N.M.], Tom Harkin [D-Iowa], Barbara Mikulski [D-Md.], Herb Kohl [D-Wisc.], Tim Johnson [D-S.D.], Bill Nelson [D-Fla.], Debbie Stabenow [D-Mich.], Maria Cantwell [D-Wash.], Ben Cardin [D-Md.], Sherrod Brown [D-Ohio], Jean Shaheen [D-N.H.], Jeff Merkley [D-Ore.], and Rolland Burris [D-Ill.].

Following, is the full text of the letter sent to Secretary Geithner:

* * *

February 3, 2010

The Honorable Timothy Geithner
Secretary
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Dear Secretary Geithner:

We write today to express our deep and growing concern about the deteriorating condition of community banks and the lack of credit availability for small businesses across the United States.

Community banks play a significant role in providing credit to businesses in communities throughout the country. They provide approximately one third of all loans under $1 million and half of all loans under $100,000.

Despite the return to profitability for most of the large, Wall Street banks that received the lion’s share of public assistance under Troubled Asset Relief Program [TARP], the survival of hundreds of small, community banks remains in question. With considerable exposure to future losses on loans tied to real estate markets -- both residential and commercial -- we call on you to take immediate steps to dedicate more attention and resources from TARP to stabilize this critically important segment of the banking industry.

According to data provided by the Federal Deposit Insurance Corporation [FDIC], 148 banks have failed since 2008. These failures impose significant costs on the Deposit Insurance Fund [DIF] and have far-reaching economic ramifications on the communities and businesses they serve.

The continued existence and steady growth of hundreds of billions of dollars in non-performing loans is placing further strain on banks across the country; 552 institutions were on FDIC’s “Problem List” as of the agency’s publication of its Quarterly Banking Profile for the Third Quarter of 2009.

This ominous overhang of impaired assets is necessitating that banks restrict lending and build capital to protect against further losses. Indeed, according to data released by the Federal Reserve, credit has continued to contract since 2008. The tight credit environment -- particularly impacting households and small businesses -- continues to undermine the effect of aggressive monetary and fiscal policies put in place to accelerate economic recovery and job growth.

Small businesses remain the real engine behind job growth in the U.S.; over the past 15 years, over 64 percent of all new jobs were created by small businesses. However, under the weight of the economic recession and significantly reduced consumer demand, many small businesses have been forced to adjust their cost structure, including eliminating jobs. With credit-card lines and other forms of revolving credit being cut, those businesses that are trying to maintain their workforce are finding it increasingly difficult -- and, in some cases, impossible -- to access the liquidity they need to weather through this downturn.

Although recent economic indicators show the economy is slowly beginning to stabilize, small businesses continue to suffer. This is a key underpinning to the weak labor market and creating a drag on our efforts to more quickly reduce real unemployment, which remains above 10 percent. To help establish real, sustainable economic recovery, we must take new, decisive action that addresses the trend of declining credit availability head-on. Failure to do so may result in a heightened risk of a prolonged economic downturn similar to that experienced by Japan through the 1990’s.

Existing programs created by the Treasury to address the plight of community banks and improve credit to small businesses have unfortunately had little impact to-date. Therefore, we have developed new approaches that can improve existing programs to strengthen community banks and have put forth a number of new proposals to improve the availability of credit for small businesses. We strongly believe these ideas provide new strategies and opportunities to take precious taxpayer resources away from programs that have largely benefitted the Wall Street firms that bear a great deal of responsibility in bringing about the financial and economic crisis, and redirect them to programs that can help bring back jobs and restore prosperity in our communities.

Strong, decisive action must be taken immediately to reassess the full range of options where public resources, including TARP, can better help address the economic crisis and strain being felt by American families and businesses on Main Street. We look forward to working together with you in this effort, because it is integral to establishing the foundation necessary to support a swift and sustained economic recovery to the future.

Sincerely,

Senators Patty Murray [D-WA], Patrick Leahy [D-VT], Carl Levin [D-MI], Jeff Bingaman [D-NM], Tom Harkin [D-IA], Barbara Mikulski [D-MD], Herb Kohl [D-WI], Tim Johnson [D-SD], Bill Nelson [D-FL], Debbie Stabenow [D-MI], Maria Cantwell [D-WA], Ben Cardin [D-MD], Sherrod Brown [D-OH], Amy Klobuchar [D-MN], Jean Shaheen [D-NH], Jeff Merkley [D-OR], Rolland Burris [D-IL], and Al Franken [D-MN].

SOURCES: FinancialStability.gov, Sen. Al Franken
____________________

Buy Green & Save Green on Earth-Friendly Products at Office Depot!

Treasury, SBA Submit Small Business Financing Forum Report to the President

Today, as a follow-up to the Nov. 18 Small Business Financing Forum, the U.S. Department of the Treasury and U.S. Small Business Administration [SBA] issued a report to President Barack Obama, summarizing the policy ideas and recommendations discussed. Last month's forum brought together small-business owners, lenders, regulators and policymakers for an open discussion focused on the best ideas for providing the support that small businesses need to continue to drive economic recovery.

The report is aimed at continuing this important dialogue going forward -- including President Obama's Forum on Jobs and Economic Growth tomorrow, during which SBA Administrator Karen Mills and Treasury Secretary Tim Geithner [pictured] will be leading a session, "Paving the Road for Small Business Job Growth."

For more information regarding Recovery Act-related small-business funding policy, check out the following resources:
* Small Business Financing Forum Report to the President
* Small Business and Community Lending Initiatve
* Fact Sheet: Unlocking Credit for Small Businesses
* Q&A for Small Business Owners

SOURCES: FinancialStability.gov, U.S. Department of the Treasury
____________________

Save 20% Off QuickBooks Pro Small Business Accounting Software + Free Shipping

President Obama Announces New Small-Business Lending Initiatives

This afternoon, President Barack Obama [pictured above with Treasury Secretary Tim Geithner and SBA Administrator Karen Mills], announced his proposal to boost lending support of small businesses, so as to promote even further business expansion and job creation.

Speaking from Metropolitan Archives, a small records-storage business based in Landover, Md., President Obama reflected on the heretofore impact of the American Recovery and Reinvestment Act of 2009; outlined specifics of his proposed lending initiatives; and provided a sneak preview of a small-biz-focused conference that Geithner and Mills will convene in the near future.

"Over the past decade and a half, America's small businesses have created 65 percent of all new jobs in the country," Obama noted. "And more than half of all Americans working in the private sector are either employed by a small business or own one -- more than half. These companies are the engine of job growth in America. They fuel our prosperity. And that's why they have to be at the forefront of our recovery.

"The problem is, our small businesses have been some of the hardest hit by this recession. From the middle of 2007 through the end of 2008, small businesses lost 2.4 million jobs. And, because banks shrunk from lending in the midst of the financial crisis, it's been difficult for entrepreneurs to take out the loans they need to start a business. For those who do own a small business, it's been difficult to finance inventories and make payroll, or expand if things are going well.

"And that's why we made sure the Recovery Act focused on helping small businesses expand and create jobs. In it, we temporarily reduced or eliminated fees on SBA loans -- loans that give small businesses more money to reinvest in their own futures. And we guaranteed some of these loans by up to 90 percent, which has given local banks and credit unions the confidence they need to lend.

"In the last eight months, these steps have made a real difference for small businesses across America. So far, the Recovery Act has supported over 33,000 loans to small businesses that have already helped save or create nearly tens of thousands of jobs -- nearly $13 billion in new lending -- $13 billion. And more than 1,200 banks and credit unions that had stopped issuing SBA loans when the financial crisis hit are lending again today. And more than $4.3 billion in federal contracts are now going to small businesses.

"We're also providing tax relief to small businesses under the Recovery Act -- relief that will give these businesses back over $5 billion this year. And we're giving tax cuts directly to 95 percent of working Americans, which includes the vast majority of small-business owners and their employees.

"So there's no question that our Recovery Act has given a boost to every American who works at a small business, or owns one, or aspires to own one. There's no question that the steps we've taken have improved the overall climate for small business across the country.

"But there's also no question that we've got a long way to go. There's still too little credit flowing to our small businesses. There's still too many entrepreneurs who can't get the loans they need to open up their doors and start hiring. There's still too many who are struggling to make payroll and to stay open. And there's still too many successful small businesses that want to expand further and hire more but just don't have the capital to do it."

Specifically, President Obama called for:

* Increasing the size of SBA’s 7[a] loan from $2 million to $5 million;

* Increasing the size of SBA’s 504 loan from $2 million to $5 million for standard borrowers [supporting a total project of $12.5 million], and from $4 million to $5.5 million for manufacturers [supporting a total project of $13.75 million]; and

* Increasing the size of SBA’s Microloan from $35,000 to $50,000.

"Finally," President Obama added, "I've asked Tim Geithner and Karen Mills to convene a conference in the coming weeks that will bring together regulators, congressional leaders, lenders and small businesses to determine what additional steps we can take to get credit flowing to small businesses that want to expand and create more jobs.

"Of all the steps we're taking to move this economy from recession to recovery, I continue to believe that the success of our small businesses will be a foundation upon which our future prosperity is built. So we will continue to do whatever we can to help these businesses grow and thrive. And I'm confident that the steps we announced today will do that for small-business owners across the country -- men and women we hear from every day."

Administrator Mills Comments on President Obama’s Proposal to Raise SBA Loan Limits
Following President Obama's announcement to raise the maximum loan size for SBA-backed loans to small business, SBA Administrator Mills issued the following statement:

"America’s 29 million small businesses have been hard-hit in this recession. Nine months ago, President Obama sent small businesses a lifeline: the American Recovery and Reinvestment Act. Since then, the SBA has supported more than 33,000 loans for a total of almost $13 billion in small-business lending. This has helped save or create tens of thousands of jobs.

"But there is much more work to be done, which is why President Obama today pledged his support for legislation that would increase the maximum size of some SBA loans. Increasing maximum loan sizes will allow the SBA to ensure that more small-business owners and entrepreneurs can get access to the credit they need to expand their operations and create jobs.

"The President also announced additional support from the Treasury Department for smaller community lenders that are committed to increasing their lending to small businesses. Secretary Geithner and I will host a conference on small-business lending with members of Congress, regulators, lenders and the small-business community. The conference will discuss additional efforts that can be taken to provide small businesses with access to credit. These steps, coupled with SBA’s ongoing efforts, will help small businesses grow and create jobs throughout America."

Rep. Velázquez Applauds, Looks Forward to "Swiftly Moving" Small-Business Lending Legislation
Shortly after President Obama's speech, Rep. Nydia M. Velázquez [D-NY], chairwoman of the U.S. House Committee on Small Business, commented on the Administration's plan for helping small businesses access credit:

"I applaud the President for reaffirming his support for our nation's small businesses and recognizing their importance to the economic recovery. With the Administration's March announcement, and again today, the President has made clear that he is committed to getting entrepreneurs the help that they need. As the Administration refines the details of this plan, I am sure they will closely consult lenders, the small-business community and Congress, and I look forward to participating in that dialogue.

"In working to increase access to capital, it is important to pursue policies that will open doors for, and enhance the opportunities, of small firms. Duplicating existing programs or instilling initiatives that only benefit the lenders does nothing to help grow our economy.

"The ultimate goal is to get affordable capital into the hands of small businesses. That is why the Committee today approved bipartisan legislation to comprehensively modernize the SBA's capital-access initiatives. This bill is expected to support $44 billion in small-business lending every year, helping to save or create 1.3 million jobs annually. I look forward to swiftly moving this legislation through the House and working with my colleagues to get this bill to the President for his signature."

To view the video of President Obama's speech, go to: http://bit.ly/ObamaVideoSmallBiz

The full text of President Obama's remarks can be found here: http://bit.ly/ObamaRemarksSmallBiz

A fact sheet on President Obama's proposal to increase SBA loan size can be found at: http://bit.ly/ObamaFactsSmallBiz

A fact sheet on FinancialStability.gov's Small Business and Community Lending Initiative, titled "Unlocking Credit for Small Businesses," is available at: http://bit.ly/FinancialStabilitySmallBiz

To track Recovery Act-related developments, go to: http://www.recovery.gov/

For information about federal contracting opportunities, go to: http://www.fedbizopps.gov/

SOURCES: U.S. Department of the Treasury, U.S. House Committee on Small Business, U.S. Small Business Administration, White House [photo by Pete Souza]
____________________

QuickBooks Online Edition for Small Business -- Free for 30 Days. Start Now!