SBA Announces Two New Initiatives to Boost Lending to Underserved Markets

While small-business owners and entrepreneurs in traditionally underserved communities continue to face challenges accessing capital, the U.S. Small Business Administration today announced two new initiatives aimed at increasing SBA-backed loans to small businesses in these markets.

SBA Administrator Karen Mills also today named Catherine L. Hughes [pictured], chairperson and founder of Radio One Inc. [NASDAQ: RAIO] -- and, in fact, a former SBA borrower -- to chair the agency’s new Advisory Council on Underserved Communities.

SBA and U.S. Department of Commerce studies have shown the importance of lower-dollar loans to small-business formation and growth in underserved communities.

With that in mind, the two new loan initiatives -- Small Loan Advantage, and Community Advantage -– are aimed at increasing the number of lower-dollar SBA 7[a] loans going to small businesses and entrepreneurs in underserved communities. The agency’s most popular loan product, 7[a] government-guaranteed loans, can be used for a variety of general business purposes -- including working capital, and purchases of equipment and real estate.

In conjunction with the implementation of these two new Advantage loan initiatives by March 15, the agency will end its existing Community Express pilot loan program on April 30.

"Over the last two years, we’ve seen lending to all small businesses tighten up, and that tightening has been even greater in traditionally underserved communities -- including among minorities, women and in rural areas," said Mills. "These new Advantage initiatives are aimed directly at getting more loans into these markets, so these small-business owners can get the capital they need to start or grow their business and create good-paying jobs in local communities across the country."

Built on what the agency refers to as its "Advantage" platform, both Small Loan Advantage and Community Advantage will offer a streamlined application process for SBA-guaranteed 7[a] loans up to $250,000. These loans will come with the regular 7[a] government guarantee; i.e., 85 percent for loans up to $150,000 and 75 percent for those greater than $150,000.

Small Loan Advantage will be available to the 630 financial institutions across the country in the agency’s Preferred Lenders Program [PLP]. Under PLP, which includes most of the agency’s highest-volume lenders, SBA delegates the final credit decisions to lenders.

With Community Advantage, the agency will expand the points of access that small-business owners have for getting loans by opening SBA’s 7[a] loan program to "mission-focused" financial institutions -- including Community Development Financial Institutions, Certified Development Companies and nonprofit microlending intermediaries.

Community Advantage will leverage the experience these institutions already have in lending to minority, women-owned and start-up companies in economically challenged markets -- along with their management and technical assistance expertise -- to help make their borrowers successful.

"These two new loan initiatives tackle a couple of factors we know exist when it comes to the challenges small-business owners face,” Mills noted. "First, to add more incentive for lower-dollar loans in these communities, we are providing a streamlined process for lenders along with the regular 7[a] government guarantee.

"Second, we are taking steps that will increase the number of places small-business owners in underserved communities can go to get loans. And also, with Community Advantage, we are making sure that the additional assistance some borrowers may need through counseling and technical assistance will be available."

Mills added that the new loan initiatives are in line with the agency’s core mission of supporting small-business growth and job creation, and goals of the new Advisory Council on Underserved Communities, announced today. The Council will provide input, advice and recommendations on how SBA, through its programs, can help strengthen competitiveness and sustainability for small businesses in underserved communities.

"Many entrepreneurs and small-business owners across the country have enormous potential to drive economic growth and create good-paying jobs in their local communities, but too often they face barriers in fulfilling that potential," said Hughes, who will chair the council.

A Nebraska native, Hughes began a career in radio in 1969 at KOWH, a small black-owned radio station in Omaha. She came to Washington, D.C., as a lecturer at Howard University’s School of Communications, and worked at several local radio stations before she and then her husband purchased a small D.C. station and turned it into Radio One. Later, Hughes bought out her husband and became sole owner -- at one point, moving into the station to make ends meet.

In January of 2004, Hughes launched TV One, a cable television channel targeted at the African American community. Today, Radio One owns 52 radio stations in major markets across the country, making the company the largest black-owned radio chain in the nation.

"I’m excited to be a part of this effort to strengthen the link between these entrepreneurs and the SBA’s wide variety of resources," Hughes said. "SBA assistance played a critical role in my success, and I’m eager to do all I can to help make sure others have access to these same opportunities."

The agency’s new Advisory Council on Underserved Communities will consist of 20 members from across the country. Over the next few weeks, the SBA will accept nominations for members to serve on the CUC.

Members will provide a critical link between SBA and small businesses in traditionally underserved communities. It is anticipated that members will reflect a variety of key sectors -- including business owners, banking and finance, community development, nonprofit and academia. Member nominations can be emailed to underservedcouncil@sba.gov.

Senator Landrieu Praises New SBA Programs
Sen. Mary L. Landrieu [D-La.], chair of the U.S. Senate Committee on Small Business and Entrepreneurship, today issued the following statement after the SBA announced its two new lending initiatives for underserved communities:

"Since the start of the financial crisis, we have seen credit lines completely shut off," said Landrieu. "As a result, small businesses in underserved areas of the country have had the hardest time obtaining adequate credit.

"The two new loan initiatives announced today have the potential to open up the credit lines to these struggling small businesses by streamlining the application process and increasing the number of lenders that entrepreneurs can choose from when obtaining a loan. By improving the access to credit in these areas, we would give these businesses in underserved communities the opportunity to boost our economy and create jobs.

"Furthering their commitment to increasing loans in underserved areas, the SBA’s Advisory Counsel on Underserved Communities provides the added support these businesses need to access SBA resources and take advantage of these lending programs.

"I look forward to working with the Council once they are assembled to energize small businesses in the most underserved areas of America."

GoodBiz113's Take
SBA's Karen Mills and her colleagues are clearly in touch with the plight of promising small-business owners whose dreams have been hamstrung for far too long by far too many cash-hoarding banks. The two programs announced today should prove to be a boon for small businesses, as well as for those banks that have have been reticent to lend money to them.

Further, the appointment of Catherine L. Hughes to chair SBA’s new Advisory Council on Underserved Communities is a welcome move to help spread the far-reaching wealth of entrepreneurship. Her solid business experience, success and leadership will likely benefit legions of current and would-be small-business owners.

SOURCES: U.S. Senate Committee on Small Business and Entrepreneurship, U.S. Small Business Administration
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NFIB Small-Business Optimism Index Posts Fourth Consecutive Gain

The National Federation of Independent Business Index of Small Business Optimism rose 1.5 points in November, rising to 93.2 -- the highest reading since December 2007, and the fourth consecutive monthly gain. The bad news: 93.2 is, from an historical perspective, still a recession-level reading [the average was about 100 before the recession started].

The last time the index was this low [prior to 2008] was in 1993. The recovery in the index continues to underperform all recovery periods since 1973, the start of the NFIB surveys.

"The index is trending up, but at a very slow pace," said Bill Dunkelberg, NFIB’s chief economist.

Employment
After hitting "zero" in October, the average increase in employment per firm turned positive in November. The average gain per firm was .01 workers per firm -- hardly different from zero, but it was not negative, which is good news.

Nine percent [seasonally adjusted] reported unfilled job openings -- down one point and historically very weak. This index component is a very good predictor of the unemployment rate -- and this number indicated the rate will nudge higher.

Over the next three months, nine percent plan to increase their employment [up one point], and 12 percent plan to reduce it [down one point], yielding a seasonally adjusted net four percent of owners planning to create new jobs -- a three-point gain from October after a four-point gain in September, an encouraging trend and the strongest reading since September 2008.

"Overall, job creation is likely to continue, but at a tepid pace," noted Dunkelberg.

Capital Spending and Outlook
The frequency of reported capital outlays over the past six months rose four points to 51 percent of all firms, pulling away from the recent record-low reading of 44 percent.

Of those making expenditures, 35 percent reported spending on new equipment [up three points]; 19 percent acquired vehicles [up three points]; and 12 percent improved or expanded facilities [up zero point].

Four percent acquired new buildings or land for expansion [up one point], and 12 percent spent money for new fixtures and furniture [up three points].

The percentage of owners planning capital outlays in the future rose two points to 20 percent, but is still historically quite low.

"Spending seems to be primarily in maintenance mode," said Dunkelberg. "If it breaks, replace it."

Nine percent characterized the current period as a good time to expand facilities [seasonally adjusted] -- up two points, and seven points better than earlier in the year. A net 16 percent expect business conditions to improve over the next six months -- a 31-point improvement since July, and the best reading since June 2005.

"Apparently, the future is looking brighter for more owners, although much will depend on what Congress does in the closing weeks of the year," said Dunkelberg.

Sales and Inventories
The net percent of all owners [seasonally adjusted] reporting higher nominal sales over the past three months worsened by two points to a net-negative 15 percent -- 19 points better than March 2009, but still indicative of very weak customer activity. Unadjusted, 21 percent of all owners reported higher sales [last three months, compared to prior three months -- down two points], while 33 percent reported lower sales [up two points].

The net percent of owners expecting higher real sales gained five points from October, rising to a net six percent of all owners [seasonally adjusted] -- a nice bump on top of October’s four-point gain. Not seasonally adjusted, 24 percent expect improvement over the next three months, while 37 percent expect declines.

Small-business owners continued to liquidate inventories, and weak sales trends gave little reason to order new stock. A net-negative 15 percent of all owners reported gains in inventories [more firms cut stocks than added to them, seasonally adjusted] -- only a point better than October. Unadjusted, 10 percent reported gains in inventory stocks [unchanged], but 25 percent reported inventory reductions [unchanged].

November is the 32nd negative double-digit month in a row, and the 42nd negative month in a row for inventory changes. For all firms, a net-negative three percent [down four points] reported stocks too low, and an unexpected deterioration in owner satisfaction with current stocks [compared to expectations for sales and the economy that have actually improved]. Plans to add to inventories rose four points to a net zero percent of all firms [seasonally adjusted] -- a surprise with the increased dissatisfaction with current stocks.

Inflation
Fourteen percent of the owners [unchanged] reported raising average selling prices, and 20 percent reported average price reductions [down two points]. Seasonally adjusted, the net percent of owners raising prices was a net negative four percent -- a one-point increase from October.

Still, November is the 24th consecutive month in which more owners reported cutting average selling prices than raising them -- a condition that might support concerns about deflation now worrying the Federal Reserve.

Reports of higher worker compensation continued to edge up, while reports of compensation cuts continued to fade. Six percent reported reduced worker compensation, and 13 percent reported gains.

Seasonally adjusted, a net eight percent reported raising worker compensation -- double October’s reading, and 10 points better than February’s record-low reading of negative two percent.

Earnings
Reports of positive earnings trends fell four points in November, registering a net-negative 30 percent. Still, far more owners report that earnings are deteriorating quarter-to-quarter than rising. Part of this is due to price-cutting, which is fading in frequency as the economy continues to grow. Not seasonally adjusted, 15 percent reported profits higher [unchanged], but 43 percent reported profits falling -- a three-point increase.

Of the owners reporting higher earnings, 60 percent cited stronger sales as the cause, and seven percent credited higher selling prices. For those reporting lower earnings compared to the previous three months, 56 percent cited weaker sales; five percent blamed rising labor costs; seven percent, higher materials costs; five percent, higher insurance costs; and nine percent blamed lower selling prices. Seven percent blamed higher taxes and regulatory costs.

Credit
Overall, 91 percent reported that all their credit needs were met, or that they were not interested in borrowing. Nine percent reported that not all of their credit needs were satisfied. A record 53 percent said they did not want a loan. Only four percent reported financing as their No. 1 business problem.

However, 30 percent of the owners reported that weak sales continued to be their top business problem, followed by 22 percent citing taxes, and 15 percent citing government regulations and red tape [taxes that consumes capital and time].

The historically high percent of owners who cite weak sales means that, for many owners, investments in new equipment or new workers are not likely to pay the business back. This is a major cause of the lack of credit demand observed in financial markets.

SOURCE: National Federation of Independent Business
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President Obama Hails Auto Industry Successes, Calls on Senate Republican Leaders to 'Stop Holding America's Small Businesses Hostage to Politics'

In this week's address -- delivered from the General Motors automobile assembly plant in Detroit/Hamtramck, Mich. -- President Barack Obama praised the successes of the auto industry's restructuring. When his Administration decided to invest in the American car companies, some said such a move was bound to fail. But since GM and Chrysler have emerged from bankruptcy, the auto industry has added 55,000 jobs -- the strongest growth in 10 years -- and, for the first time since 2004, all three companies are operating at a profit.

The President also called on Republican leaders in the Senate to stop blocking a vote on a bill helping small businesses. Even though this bill will help the nation's recovery, and has been endorsed by groups such as the Chamber of Commerce and the National Federation of Independent Business [NFIB], the Republican Senate leadership continues to hold it hostage to politics by denying an up-or-down vote on the bill.

To view the video of President Obama's weekly address, go to: http://bit.ly/Video07312010

To read the transcript of the President's weekly address, please visit: http://bit.ly/Transcript07312010

To learn more about H.R. 5297 -- The Small Business Jobs and Credit Bill of 2010, go to: http://bit.ly/HR5297

SOURCES: Library of Congress, The White House [photo by Pete Souza]
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New First-Mortgage Loan Poolers Will Jump-Start Secondary Market for SBA 504 Loans, Make Credit More Available

Today, the U.S. Small Business Administration announced the first nine loan pool originators authorized by the agency to assemble and sell pools of 504 program first-mortgage loans -- a major step to jump-starting a secondary market that should make fixed-asset financing more widely available for small businesses.

The new program was approved under the American Recovery and Reinvestment Act.

Prior to the recent disruption in the credit market, a private secondary market for these loans existed, but has not revived as the economy has started to rebound. SBA expects this new program to breathe new life into that secondary market and improve access to credit for small businesses by providing a resource that can help boost liquidity to small-business lenders.

"With the resources provided in the Recovery Act, we have engineered a turnaround in its SBA lending, putting nearly $30 billion in the hands of small businesses across the country," said SBA Administrator Karen Mills [pictured]. "This added support now to relaunch the 504 first-mortgage secondary market builds on that success, and will help leverage even more capital for small businesses to support their growth and create new jobs."

Under the program, the SBA will provide a government guarantee on pools of portions of eligible 504 first-mortgage loans assembled by approved pool originators to be sold to third-party investors. Lenders will retain at least 15 percent of each individual loan, pool originators will assume five percent of the risk, and the SBA will guarantee the remaining 80 percent.

Typically, a 504 project includes three elements:

1] A loan [or first mortgage] secured with a senior lien from a private-sector lender, covering up to 50 percent of the project cost;

2] A second mortgage secured with a junior lien from a Certified Development Company [backed by a 100 percent SBA-guaranteed debenture], covering up to 40 percent of the cost; and

3] A contribution of at least 10 percent equity from the small-business borrower.

Under the new program, portions of the senior liens are pooled by pool originators and sold to investors in the secondary market. To be eligible to be included in a pool, the first mortgage must be associated with a 504 loan disbursed on or after Feb. 17, 2009. The program will be in place until Feb. 16, 2011 -- or until $3 billion in new pools are created, whichever occurs first.

The pool originators approved thus far are:

* Bank of America, N. A. of New York, N.Y.;

* Cantor Fitzgerald & Co. of New York, N.Y.;

* Citizens Bank of Elizabethton, Tenn.;

* Coastal Securities, Inc. of Houston, Tex.;

* Community South Bank of Knoxville, Tenn.;

* Fidelity Bank of Covington, Ga.;

* Meadows Bank of Las Vegas, Nev.;

* Morgan Stanley Bank, N.A. of Salt Lake City, Utah; and

* Voyager Bank of Eden Prairie, Minn.

For additional information on the pool originators, visit: http://bit.ly/SecondaryMarket.

The list will be updated regularly as new originators are approved.

For more information about all of the SBA’s programs for small businesses, visit the SBA’s website at http://www.sba.gov/.

SOURCE: U.S. Small Business Administration
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President Obama Outlines Latest in Series of New Small-Business Proposals; Successful SBA Programs Expanded to Boost Working Capital

Today in Lanham, Md., President Barack Obama [pictured] proposed the expansion of two critical Small Business Administration [SBA] lending programs aimed at allowing small businesses to refinance, and increasing limits for working capital. These are both legislative proposals designed to help small businesses through what continues to be a difficult period in credit markets.

“The true engine of job creation will always be businesses,” President Obama declared. “What government can do is fuel that engine: by giving entrepreneurs and companies the support to open their doors, expand, and hire more workers. Today, we're taking another step towards assisting small-business owners get the capital they need to grow and hire.”

SBA Administrator Karen Mills was pleased with this latest development. “These proposals will provide us with two effective tools to help small businesses meet specific challenges brought on bythe recession,” she said. “First, in the tight credit market of the last two years, lines of credit have been cut for small firms. Raising the limit on SBA Express loans to $1 million will mean more small-business owners will have quicker access to this source of capital to help restock inventories and support larger revenue sales and, literally, take that next step to grow their business and create new jobs.

“Second, thousands of good, creditworthy businesses find themselves caught by declining real estate values as a result of this recession. With many of them now facing mortgages coming due in the next few years, the ability to refinance into SBA’s 504 loan will give them the chance to lock in long-term, stable financing, as well as protect jobs by protecting small businesses from foreclosure.”

Following, are details of the President’s new small-business initiatives:

Expand SBA’s Existing Program to Temporarily Support Refinancing for Owner-Occupied Commercial Real Estate Loans
The Administration is proposing legislation to temporarily allow for the refinancing of owner-occupied commercial real estate [CRE] loans under the SBA’s 504 program, which provides guarantees on loans for the development of real estate and other fixed assets. Currently, 504 loans cannot be used for the refinancing of maturing debt. This change would respond to the difficulties that many current, solvent borrowers face in refinancing existing commercial real estate loans.

Businesses with a loan maturing in the next year, who are current on all loan payments, will be eligible. Lenders that are refinancing mortgages for existing customers will make a loan for up to 70 percent of the current property value; and SBA will help finance the remaining 20 percent. For new lenders taking on a refinancing project, SBA will take on a greater share of financing, up to 40 percent. SBA’s proposal for a temporary, zero-subsidy CRE refinancing program would be funded through additional fees for refinancing projects, not through a Congressional appropriation. This proposal will help refinance up to $18.7 billion each year in commercial real estate that might otherwise be foreclosed and liquidated.

Temporarily Increase the Cap on SBA Express Loans from $350,000 to $1 Million
The President is proposing to temporarily increase the maximum SBA Express loan size to $1 million, which would expand the program’s ability to help a broad range of small businesses through a streamlined approval process.

Unlike traditional 7[a] loans, lenders can use their own paperwork for SBA Express loans, which can be structured as revolving lines of credit. Currently, these Express loans are capped at $350,000, and carry a 50 percent guarantee. Fees would cover virtually all of the added costs of this proposal.

These proposals complement the President’s broader small-business agenda -- a key part of his overall jobs plan. The other elements of the small-business agenda include:

* Extending small-business expensing and bonus depreciation for 2010.

* Eliminating capital-gains taxes for small businesses in 2010.

* A Small Business Jobs and Wages Tax Credit that would cut taxes for more than 1 million small businesses by paying up to $5,000 for every net new job, and covers payroll taxes on overall wage increases in excess of inflation.

* A proposal to transfer, through legislation, $30 billion to a new Small Business Lending Fund that will support lending by community and smaller banks.

* Additional SBA lending proposals -- including an extension of the Recovery Act programs that eliminate fees and raise guarantees on SBA’s two largest loan programs, and permanent increases in the maximum loan sizes for major SBA programs.

An SBA Fact Sheet on these proposals is available at: http://bit.ly/SmallBizWorkingCapital

SOURCE: U.S. Small Business Administration
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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
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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]
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Verbatim: Leaders Advocate Small-Business Outreach, Lending, Health Care, Micro-Credit, Optimism and Passion

Periodically, GoodBiz113 presents diverse views on small business and entrepreneurship -- directly from those who help shape small-business policies and practices. Here's what some key influencers said last week.

“We’ve received very positive feedback from entrepreneurs throughout the state who have attended recent Small Business Committee outreach conferences... These events have helped Louisianians learn how to get SBA-backed loans, secure federal contracts, and create new jobs for Louisiana’s workers. I look forward to another successful outreach conference in Baton Rouge to help our local small business owners manage a business that will add new jobs for the state and help get our economy back on track.” -- Sen. Mary Landrieu [D-La.], chair of the U.S. Senate Committee on Small Business and Entrepreneurship, announcing that that the committee will host a Small Business Outreach Conference on Friday, May 15, from 10 a.m. to 2 p.m., at the Baton Rouge River Center in Baton Rouge, La., for small-business owners looking to utilize federal and state small-business assistance programs.

Sen. Landrieu's committee will work with the U.S. Small Business Administration [SBA] and Louisiana Economic Development [LED] to provide brief overviews of SBA lending programs, federal contracting opportunities, LED’s Small and Emerging Business Development Program, plus other programs to help small businesses maintain and grow their businesses in this tough economic climate. The committee held several similar outreach conferences in Lafayette, Lake Charles and Shreveport, La., and plans to hold additional outreach conferences throughout the state in the coming months. [May 4, U.S. Senate Committee on Small Business and Entrepreneurship]

* * *

"It's a bit of progress. Is it going to be sustainable? I don't know. The key is whether or not you can convince small businesses that now is the time to invest, given the historic low interest rates and fee reductions available through SBA financing." -- Kurt Chilcott, president of CDC Small Business Finance, a San Diego, Cal., lender of SBA-backed 504 loans. It approved $20.3 million in loans in April, up from $11.6 million in March. [May 5, The Wall Street Journal]

* * *

"Lack of access to affordable health-care coverage is a huge crisis for the small-business community in Maine and across the country. If we exclude action to address dysfunctional small group insurance markets from health-reform legislation, then we are going to leave 52 percent of the uninsured behind... The simple truth is that reform is going to require we realize savings – both to reduce the high burden of health-care costs and to enable us to assist those who truly need help to access care. We must not ignore promising measures such as SHOP, which can make fundamental improvement in coverage without increasing deficits. This is simply a common sense reform." -- Sen. Olympia Snowe [R-Maine], ranking member of the U.S. Senate Committee on Small Business and Entrepreneurship, and a member of the Senate Finance Committee.

In a May 5 roundtable discussion with the Senate Finance Committee, Sen. Snowe argued that limiting health-care coverage to firms with 10 or fewer employees will result in the failure to cover the 26 million uninsured Americans who work for firms with fewer than 100 employees. She is now moving to reintroduce the Small Business Health Options Program [aka SHOP Act], which permits small businesses and the self-employed to work together, across state lines, to secure affordable coverage and find ways to reduce administrative costs. [May 6, The Exception Magazine]

* * *

"To get out of this recession, we need to do all that we can to help established small businesses and prospective entrepreneurs succeed and create new jobs... Just as they have in the past, small firms promise the surest path to a recovery, and these initiatives give them the right tools and support they need to prosper." -- Rep. Nydia M. Velázquez [D-NY], chairwoman of the House Small Business Committee, during a committee hearing to examine a bipartisan legislative package that would update key entrepreneurial development programs within the SBA.

On May 6, Velázquez' committee reviewed a print of the Job Creation Through Entrepreneurship Act of 2009. If enacted, the legislation would mark the first overhaul of the SBA's entrepreneurial development programs in a decade. The measure expands specific programs, such as Small Business Development Centers [SBDCs], Women's Business Centers [WBCs] and the Service Corps of Retired Executives [SCORE]. The bill also creates new support programs for veteran-owned and Native American-owned small businesses; improves cross-program coordination to maximize use of program resources; and creates 21st century online learning initiatives for entrepreneurs. In addition, the bill creates a grant program for SBDCs, specifically designed to assist small firms in securing capital and credit. [May 7, U.S. House Committee on Small Business]

* * *

"Micro-credit has been one area where there has been no impact of the current banking crisis. It is still as robust as ever... The micro-credit system will play an important role in the recovery process, because people are losing jobs and the banks are not giving loans. The micro-credit system will help in creating self-employment by giving small loans, which in turn will help the economy." -- Professor Mohammad Yunus, an economist who won the 2006 Nobel Peace Prize 30 years after launching the innovative Grameen Bank project in Bangladesh in 1976.

In January 2008, the bank opened its first branch, Grameen America, in the Jackson Heights area of Queens in New York. In its first year, it lent a total of $1.5 million to more than 700 people to start small businesses or grow existing enterprises. [May 7, BBC News]

* * *

"The president made a commitment that we will stand behind the auto companies and workers... Clearly, the problems that we face, and the challenges that we face today, didn't occur overnight and they're not going to be solved overnight. We need to get the economy growing. We need to get people buying automobiles again." -- Ed Montgomery, President Barack Obama's Director of Recovery for Auto Communities and Workers, during a two-day swing through Michigan to listen to pleas for help from local officials and workers in cities stretching from Grand Rapids to Detroit. [May 8, Chicago Tribune]

* * *

"...I have little doubt that there will be various interests -- vocal and powerful -- who will oppose different aspects of this budget. Change is never easy. However, I believe that after an era of profound irresponsibility, Americans are ready to embrace the shared responsibilities we have to each other and to generations to come. They want to put old arguments and the divisions of the past behind us, put problem-solving ahead of point-scoring, and reconstruct an economy that is built on a solid new foundation. If we do that, America once again will teem with new industry and commerce, hum with the energy of new discoveries and inventions, and be a place where anyone with a good idea and the will to work can live their dreams..." -- President Barack Obama [pictured above, with Office of Management and Budget [OMB] Director Peter Orszag, left, and Deputy Director Robert Nabors], upon presenting his Budget of the United States Government for Fiscal Year 2010 to the 111th Congress. [May 8, Office of Management and Budget]

* * *

"Step by step, we are beginning to make progress. Of course, that is no solace for those who have lost their jobs, or to the small-business owners whose hearts break at letting longtime employees go." -- President Barack Obama, shortly after the government announced that the unemployment rate rose to a 25-year high of 8.9 percent in April. Labor Department figures show that 539,000 Americans lost their jobs last month, compared to more than 600,000 in March. [May 8, Voice of America]

* * *

"You will succeed, and your success will define you and the future of America... Passion is the driver of America's successful small businesses. It is the basis for our country's entrepreneurial spirit. And I strongly believe that this class has both an opportunity -- and a responsibility -- to discover and pursue your passion." -- SBA Administrator Karen G. Mills, addressing approximately 1,871 University of Maine Class of 2009 graduates at two ceremonies on Saturday, May 9.

Mills, whose career is characterized by notable successes in managing various kinds of businesses and in raising capital to support entrepreneurs, delivered an upbeat message for graduates entering the job market during difficult economic times. She pointed to passion as the defining characteristic of successful business owners, particularly in the context of small-business operations, and noted that small businesses are responsible for half of private-sector jobs and that they have created 70 percent of new jobs in the past decade. [May 9, The University of Maine]

SOURCES: BBC News, Chicago Tribune, Library of Congress, Office of Management and Budget, U.S. House Committee on Small Business, U.S. Senate Committee on Small Business and Entrepreneurship, U.S. Small Business Administration, The University of Maine, Voice of America, The Wall Street Journal, The White House
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Verbatim: Georgia's Martin-Chambliss Runoff Election Campaign Tops Week's Features

Every week, GoodBiz113 features influencers who are propelling the interests of small-business owners, entrepreneurs, consultants, self-employed folks, artists, etc.

* "Georgia voters are being hit with misleading ads from both sides as Republican Sen. Chambliss battles Democratic challenger Jim Martin [pictured] in a Dec. 2 runoff election... In one ad, Chambliss tells viewers that Martin 'wants to help Barack Obama raise taxes on nearly every small business in Georgia.' Not so. What Obama has proposed would affect only the most affluent 2.4 percent of small-business owners, or less." -- FactCheck.org, a project of the University of Pennsylvania's Public Policy Center ["Peach State Piffle," Newsweek, 11/21/2008]

* "You want businesses to focus on running their business. You don't want them to devote any brain cells to focusing on the tax code." -- Tim Kane, an economist and a senior fellow at the Kauffman Foundation ["Is a Small-Business Tax Cut Coming?" U.S. News & World Report, 11/24/2008]

* “The frozen lending market has left small businesses in the cold as we face the holiday rush... I'm glad the Secretary has taken our warnings seriously and taken this step forward. It should provide some needed relief at a critical time. We hope small businesses will continue to get the help they deserve as further steps are taken to repair our ailing economy.” -- Sen. John Kerry [D-Mass.], chairman of the U.S. Senate Committee on Small Business and Entrepreneurship, on Nov. 25, after U.S. Treasury Department officials announced their plan to infuse $20 billion into the secondary market through loans to asset managers -- a middle-of-the-road approach that will help to inject some liquidity into the market, and should make it easier for entrepreneurs to gain access to credit as they look to stock up on holiday supplies and services. One week prior to the announcement, Kerry had collaborated with Sens. Olympia Snowe [R-Maine] and Charles Schumer [D-N.Y.] to urge Treasury Secretary Henry Paulson to channel a portion of the $700 billion rescue package [AKA Wall Street bailout] to be used to purchase government-backed small-business loans through the Troubled Assets Relief Program [TARP].

* "We'll be looking for long-term sustainable solutions... I think everyone who knows me knows I'm a different kind of Democrat. I'm an Alaskan... I support drilling. Alaskans are libertarians, we are independent. We like to have our individual rights and freedoms but also recognize we are a resource state." -- Mark Begich, who defeated longtime Sen. Ted Stevens on Nov. 4, and has his sights on assignments on the U.S. Senate Appropriations, Finance, Commerce and/or Small Business and Entrepreneurship Committees. ["Begich Takes U.S. Senate," Homer Tribune, 11/26/2008]

* “We all know the economy is in deep trouble... I believe the best response is to create jobs on Main Street and provide the middle class with significant relief, while also building a solid foundation for long-term prosperity... President-elect Barack Obama’s economic recovery plan should be especially good for Minnesota, with his focus on infrastructure and renewable energy. I want to go back to Washington and advocate for this recovery plan, based on what we’re already doing in Minnesota and what more needs to be done.” -- Sen. Amy Klobuchar [D-Minn.], before embarking today [Dec. 1] on her weeklong, 17-city Main Street Jobs Tour of businesses throughout Minnesota, to focus on opportunities for job creation with infrastructure and renewable-energy projects

GoodBiz113's take: America's small businesses would be so much better off if all of our senators and representatives in Congress followed Sen. Amy Klobuchar's example; i.e., actually getting out to meet and talk with us about business funding, affordable health insurance, taxes, etc. Given his small-biz-friendly stance on such issues, Jim Martin impresses us one who would do just that. Hopefully, during tomorrow's runoff election, Georgia voters will elect Martin to the U.S. Senate.

SOURCES: FactCheck.org, Homer Tribune, Newsweek, Politico.com, U.S. Department of the Treasury, U.S. News & World Report, U.S. Senate Committee on Small Business and Entrepreneurship
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Kerry Urges President Bush to Help America’s Small Businesses

In a letter to President Bush yesterday, Sen. John Kerry [D-Mass.], chairman of the U.S. Senate Committee on Small Business and Entrepreneurship, pleaded for action to help save America’s entrepreneurs. With private banks shutting their doors to struggling business owners, many are turning to the Small Business Administration [SBA] for help, but they’re finding little assistance.

“Since last November, I’ve urged this Administration to prepare for the looming credit crunch,” said Kerry. “In letters and hearings, members of the Committee asked the SBA to step up to help small businesses. Despite the extraordinary financial crisis, the agency has been of little help to the very people they’re meant to serve.”

In September, Kerry introduced the Small Business Lending Market Stabilization Act of 2008 [S. 3596], which temporarily suspends fees for government loans, and Sen. Barack Obama [D-Ill.] has proposed a similar measure. Kerry has also held two hearings on the credit crisis and sent a previous letter to the SBA, urging them to work in a bipartisan manner to help solve the crisis. The SBA has ignored Kerry’s repeated warnings and calls for action.

Kerry’s letter comes as new data shows that lending for the SBA’s largest loan program – the 7[a] lending program, which is the nation’s largest source of long-term small business capital – has fallen by nearly 50 percent, compared with the same period last year. The SBA’s fees for these loan programs, along with banks' rising cost of funds, have made SBA loans out of reach for many entrepreneurs. Small-business owners are having an increasingly difficult time maintaining their businesses, as other sources of credit -- such as credit cards and home equity loans -- are drying up as well.

In addition to temporarily reducing fees, Kerry noted that the Administration could make disaster loans available nationwide, to serve as bridge loans until the rescue package takes effect. A similar approach was used after 9/11 and proved to be helpful.

Among further changes to help stabilize lending in the 7[a] program: allowing weighted average coupons to sell SBA loans on the secondary market; adopting a different rate index, to get the best rate for borrowers and to make the program compatible with other rate standards; and temporarily adjusting the rate cap for the loans, which will make the 7[a] program more efficient and cost-effective and restart the flow of capital to small businesses. Congress is pushing for such changes, but the SBA has the immediate authority to revise the program.

“The Administration should take immediate action to jump-start small-business lending,” said Kerry. “Waiting for a larger bailout of banks isn’t an option for many firms in desperate need of capital. My hope is that the President will see the urgency of this matter, to push the SBA to work with us to save hundreds of businesses and thousands of jobs.”

GoodBiz113's take: Last April, when President Bush helped kick off National Small Business Week, he told the audience of small-business owners and stakeholders, "The truth of the matter is, every day ought to be Small Business Day in America... Small businesses create over two-thirds of all new jobs in America. And if you want your economy to grow, and if you want the country to be hopeful, it seems like you ought to be celebrating the talent and the energy of our small business owners -- daily." Indeed, Mr. President. Now, how about heeding Sen. Kerry's call for bipartisan action to bolster our entrepreneurial endeavors with the financial resources needed today, so that we can continue to fuel America's economy for all -- Democrats, Republicans and Independents alike?

To read the letter that Sen. Kerry sent to President Bush, please click here.

SOURCES: GovTrack.us, Obama for America, Peace Corps Online [photo], U.S. Senate Committee on Small Business and Entrepreneurship, WashingtonWatch.com, WhiteHouse.gov
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Franken Campaign Releases Two New Ads Focusing on the Economy, Middle-Class Families and Small Businesses

Just one day after Minnesota's U.S. Senate candidate Al Franken unveiled his proposal to unfreeze credit and help small businesses create jobs, his campaign released two new television spots highlighting Franken's strong message on middle-class economic issues and supporting small businesses. The ads -- "Get to Work" and "Honest Differences" -- began airing this morning and will run statewide.

"The election comes down to a simple choice," said Andy Barr, communications director of the Al Franken for Senate campaign. "Norm Coleman chose Bush economics over Minnesota's middle class. And, now, Minnesotans have a chance to choose a new direction. In these ads, Al Franken lays out his plans to help the middle class: Cut taxes for middle-class families, create jobs, bring real oversight to Wall Street, and work to put our economy back on track."


SCRIPT: "Get To Work"
Al Franken: It's such a tough time. People's life savings are literally slipping away. We have got to change the disastrous policies of the Bush administration. I don't have all the answers – but here's where we start. Let's stop the billions of dollars in giveaways to big oil and drug companies. Bring real oversight to Wall Street. Work to make college affordable. And fix the economy to help the middle class. I'm Al Franken. I approve this message. Because it's time to get to work.


SCRIPT: "Honest Differences"
Announcer: Honest differences on the issues that matter to your family. The economy: Al Franken supports tax breaks for the middle class. A five thousand-dollar tax credit to help families pay for college. Stop giveaways to the special interests. Norm Coleman? He supported George Bush's economic plan all the way, voting for budgets that have left us ten trillion dollars in debt. It's Al Franken who will stand up for the middle class. For a change.

Al Franken: I'm Al Franken, and I approve this message.


GoodBiz113's take: During this election year, while far too many candidates have stooped to unleashing petty, baseless and mean-spirited attacks on their opponents, it's refreshing to see and hear specific, pragmatic and forthright proposals -- especially those that pertain directly to economy-propelling small businesses.

SOURCE: Al Franken for U.S. Senate
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Joined by Sen. Dorgan, Franken Proposes New Lifeline for Minnesota Small Businesses

Joined by Sen. Byron Dorgan [D - N.D.] and two local small-business owners, DFL U.S. Senate candidate Al Franken [D-Minn.] today offered a new proposal to unfreeze credit for Minnesota small businesses. His initiative is part of an economic recovery plan designed to create jobs and help Minnesota families in these tough economic times.

Franken unveiled the plan today at a news conference, joined by Dorgan and two local entrepreneurs:

* Mallard Teal is the owner of Payne Ave. Body Shop. A small-business loan enabled him to renovate his storefront and expand his business.

* Mary Leonard is the owner of Chocolat Celeste. She applies for a seasonal loan each year to expand production and hire additional employees for the busy Christmas season -- but this year, has been unable to acquire that capital.

"George Bush and Norm Coleman just don't get it: giveaways to the special interests and tax cuts for millionaire CEOs don't create jobs," Franken declared. "Small businesses create jobs. And, while Washington rushed to bail out huge corporations on Wall Street, we're going to lose jobs here in Minnesota if we don't do something to unfreeze credit for our small businesses. My proposal will ensure that folks like Mallard and Mary can continue to grow their operations and get our economy moving again."

Dorgan wholeheartedly agreed. "Al and I both opposed the bailout because it didn't protect taxpayers by adding in provisions to make sure this type of meltdown would not happen again," he said. "Al Franken is now proposing smart ideas to get this economy moving. We need him in the Senate to help fight for the middle class and stand up to the special interests."

Franken's proposal generates $4 billion for direct loans to small businesses through the Small Business Administration [SBA], and adds another $1 billion to the SBA's loan guaranty programs. It also simplifies the process of obtaining these loans; eliminates associated fees; and expands the network of lenders to increase liquidity and secure better loan rates for small businesses.

The initial $5 billion investment will be repaid by small businesses, resulting in no net cost to taxpayers over time. But Franken called for the $5 billion upfront cost to be paid for, in the short term, by taking it out of the $700 billion earmarked for the bailout package, or by eliminating unwarranted and excess stock-option deductions on executive compensation.

SOURCE: Al Franken for U.S. Senate
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Obama Proposes New Small-Business Rescue Plan

During his final American Jobs Tour stop, in the Appalachian community of Chillicothe, Ohio, Democratic presidential hopeful Sen. Barack Obama [D-Ill.] demonstrated steady leadership and introduced a new short-term proposal to address the credit crisis of struggling small businesses.

Sen. Obama’s goal is to put all tools on the table to ensure that necessary steps are taken to help Americans who are scrambling financially. Many small-business owners can’t even make their payroll or finance their holiday inventories. Obama’s proposal is one giant leap toward helping them during this time of financial crisis.

While the financial-market rescue plan [AKA bailout] is designed to unfreeze credit, which will indirectly benefit small businesses, Obama recognizes that small businesses need direct and immediate access to capital now. Yesterday, he called for a Small Business Rescue Plan to help small firms get the loans they need to conduct day-to-day operating expenses, undertake short-term investments, and meet payrolls.

The plan will use tools available through the Small Business Administration [SBA] to aggressively extend credit to struggling firms, while providing tax cuts for small businesses to encourage job creation. With America's 27 million small businesses responsible for more than two-thirds of new job creation, this plan is vital to stemming job losses and turning our economy around.

Barack Obama’s Small Business Rescue Plan includes:

* A Nationwide Emergency Lending Facility for Small Businesses: Just as our nation did in the wake of 9/11, when businesses all around the country were facing economic injury, Obama is calling for the SBA to directly lend to small businesses that cannot access other sources of capital. The facility will be run through the SBA's Disaster Loan Program, which is designed to offer affordable, fixed-rate loans to small firms to meet operating expenses, undertake needed short-term investments, or to refinance debt. Loans should be available with an expedited approval and disbursement process, so that firms can access the credit needed to meet their operating expenses immediately.

* Expanding SBA Guarantees to Encourage Private Lending to Small Businesses: Obama is calling for expanding the SBA’s key loan guarantee programs -- 7[a] and 504 -- by temporarily eliminating fees for borrowers and lenders, and increasing the guarantee rate on private loans. These steps will give lenders new incentives to lend and help unlock credit for small firms. It will send a clear signal that the government is standing with small businesses and ensuring sources of loans.

* Temporary Tax Incentives to Encourage Small Businesses to Invest in Jobs: Barack Obama will give small businesses additional incentives to make investments and start creating jobs again by providing temporary business tax incentives through 2009. February's Economic Stimulus Act of 2008 increased maximum Section 179 expenses to $250,000, but this expires in December 2008. This provision will encourage all firms to pursue investment in the coming months, but will benefit small firms in particular, who generally have smaller amounts of annual property purchases and so choose to expense the cost of their acquired property.

"If we're going to rebuild this economy from the bottom up, it has to start with our small businesses on Main Street -- not just the big banks on Wall Street," Obama declared at yesterday's American Jobs Tour rally stop in Ohio. "Small businesses employ half of the workers in the private sector in this country, and account for the majority of the job growth. But we also know that a credit crunch has dried up capital and put these jobs at risk. Shops can't finance their inventories, and small firms can't make payroll. It's harder to get an idea off the ground, or to provide health care for your employees. If we don't act, we'll be looking at scaled back operations, shuttered shops, and laid off workers.

"That's why we need a Small Business Rescue Plan, so that we're extending our hand to the shops and restaurants -- the start-ups and small firms that create jobs and make our economy grow. Main Street needs relief and you need it now. We won't grow government; we'll work within the Small Business Administration to keep folks afloat, while providing tax cuts to lift the tide. It's what we did after 9/11, and we were able to get low-cost loans out to tens of thousands of small businesses. That's one of the many steps we can, and should, take to help stop job losses and turn this economy around.

"It starts with a nationwide program to provide affordable, fixed-rate loans to small businesses across the country. We can run this through the SBA's Disaster Loan Program, which provides loans to small-business owners to get the help they need to maintain their inventory and meet their payroll. We'll also make it easier for private lenders to make small-business loans by expanding the SBA's Guaranty Loan Program. By temporarily eliminating fees for borrowers and lenders, we can unlock the credit that small firms need to move forward, pay their workers, and grow their business.

"Just as we make lending more available, we need to relieve the tax burden on small businesses to help create jobs. That's why I've proposed eliminating all capital-gains taxes on investments in small businesses and start-ups. And today, I'm proposing an additional temporary business tax incentive through next year to encourage new investments. Because it's time to protect the jobs we have and to create the jobs of tomorrow by unlocking the drive, and ingenuity, and innovation of the American people. That's what I'll do as president of the United States."

Barack Obama's comprehensive and far-reaching Small Business Rescue Plan marks yet another bold move on behalf of America's small businesses. He and running mate Sen. Joe Biden [D-Del.] have also proposed the following:

* Zero Capital-Gains Rate for Investment in Small Businesses: Barack Obama believes that we need to encourage investment in small businesses to help create jobs and turn our economy around. That’s why he will eliminate all capital-gains taxes on investments made in small and start-up businesses. Unlike John McCain, who wants to give $200 billion in new tax cuts to America’s largest and most profitable businesses, Obama wants to cut taxes for those small businesses that create jobs, but are struggling with restricted access to credit -- alongside skyrocketing health-care and energy costs.

* Tax Cuts for the Vast Majority of Small Businesses: Barack Obama believes that we need to reduce burdens on small-business owners -- many of whom are struggling to succeed in the midst of our economic crisis. Unlike John McCain, Obama has proposed direct tax cuts for small businesses -- including zero capital gains for investments in small businesses, plus a new 50 percent tax credit for businesses that offer health care to their employees on behalf of their employees, and to small businesses with no employees. Obama will provide a $1,000 Making Work Pay middle-class tax credit to 95 percent of workers and their families, which will help individuals with small-business income -- including the country’s more than 20 million self-employed individuals. And, because the Obama plan preserves existing tax rates for families making less than $250,000 a year, nearly 99 percent of small-business owners won’t see any tax increase under the Obama plan.

* New Small-Business Health Tax Credit: Barack Obama will exempt small businesses from any requirement to offer health insurance to their employees or contribute on their behalf. Instead, he will give small businesses new incentives to provide health care with a Small Business Health Tax Credit. The Obama Small Business Health Tax Credit will provide a refundable credit of up to 50 percent on premiums paid by small businesses.

* Investment of $15 Billion a Year in Renewable Sources of Energy: Barack Obama will create five million new, green jobs over the next decade -- jobs that pay well and can't be outsourced; jobs building solar panels and wind turbines and fuel-efficient cars; jobs that will help us end our dependence on oil from Middle East dictators.

* Investing in Our Nation's Infrastructure: Barack Obama will put two million more Americans to work rebuilding our crumbling roads, schools, and bridges -- because it is time to build an American infrastructure for the 21st century. He would also work with the building trades to expand apprenticeship programs, so that young workers can develop their skills.

GoodBiz113's take: Wall Street has gotten its $700 billion bailout. Unfortunately, it'll be awhile before small businesses on Main Street, as well as in America's rural farming areas, benefit from the supposed "trickle-down effect" of that massive cash infusion. Barack Obama and Joe Biden's innovative Small Business Rescue Plan is just what small businesses, entrepreneurs, start-ups, and working families and households need for short- and long-term endeavors, and deserves to be funded and implemented ASAP.

SOURCES: Internal Revenue Service, Obama for America, U.S. Small Business Administration
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House Committee Calls for Sweeping Reforms to SBIR Program; Velázquez Critiques President Bush's Final State of the Union Address

As the specter of a recession looms, small-business innovation becomes an increasingly vital asset to our economy. It was technology startups, after all, that led the way back to growth during our last slowdown.

During a hearing on the Small Business Innovation and Research [SBIR] program today, witnesses underscored its importance in ensuring American competitiveness. They also offered compelling evidence of a need to reform various parts of the initiative.

"SBIR is the largest government-wide research and development program, and it has helped turn some of the nation’s best ideas into tangible market realities," said Rep. Nydia Velázquez [D-N.Y.], chairwoman of the House Committee on Small Business. "Unfortunately, many entrepreneurs are still not getting the access to the R&D funds they need. That puts them at great disadvantage and robs our economy of the type of innovation we require most."

The SBIR was created by Congress in 1982, and is scheduled to sunset on Sept. 30, 2008. Throughout its history, the program has used small firms to help federal agencies meet their R&D goals. It has also fostered considerable technological innovation and prompted the commercialization of resulting products and services. However, as technology and national priorities change, the initiative is failing to keep pace.

"Even in a challenging economy, SBIR has helped small firms create jobs and wealth. We must continue to strengthen this program and align its focus with today’s technological realities," said Velázquez.

When the SBIR Reauthorization Act of 2000 was passed, technologies such as wireless communications, high definition television and hybrid cars were still in relative infancy. While that law made several modifications, the program is in need of further modernization. Witnesses also pointed to a need for increasing SBIR grants; suggested streamlining the application process; and called for greater flexibility to allow participating firms to leverage private-sector funds.

"One sure way to keep the American economy on the right track is to reform this initiative with an emphasis on providing resources for economically viable technologies," Velázquez noted. "We should increase competition within SBIR, ensure that awards go to projects that will produce the greatest return for taxpayers, and do everything possible to help today’s small firms bring forth tomorrow’s goods and services."

Click link for video clips of today's full committee hearing.

For the list of witnesses and their testimonies, click here.

Velázquez: President Bush’s Final State of the Union Speech Falls Short on Proposals to Help Small Firms Spur the Economy

President George W. Bush delivered his final State of the Union address last night, and spoke about the bipartisan economic stimulus plan that Democrats negotiated on behalf of America’s entrepreneurs and working families. The $147 billion stimulus package is meant to spur the lagging economy, and includes short-term provisions to help small businesses. These include a one-year doubling of the capital expensing limit from $125,000 to $250,000, and an opportunity to write off 50 percent of depreciation for certain equipment purchases in 2008.

All are steps in the right direction, Velázquez observed, but President Bush needed to have spoken about long-term support for the 26.8 million small firms that comprise the economic engine of the United States. He mentioned small businesses only once, and those who tuned into his speech were left wondering if the final 50 weeks of his administration will be just like his first seven years—full of empty promises.

"The president has missed yet another opportunity to address the long-term concerns of small-business owners," said Velázquez. "In the face of a recession, it is clear that it is Democrats who will do whatever is necessary to help American entrepreneurs."

Several of the top concerns of small firms were particularly suspect in their absence from the president’s speech. He failed to adequately broach such items as health care, energy costs and the need for affordable capital.

"Everyone is feeling the credit crunch and rising costs, but entrepreneurs are being hit particularly hard," Velázquez noted. "That harms their ability to grow their businesses, and robs the economy of their full contributions.

"The president said we should empower people to grow the economy. Unfortunately, his State of the Union address failed to lay out a vision to do that."

SOURCES: Library of Congress, U.S. House Committee on Small Business, U.S. Small Business Administration, The White House [photo]

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