WASHINGTON (NNPA) - Small banks and businesses have always been vital to a robust economy. But with American spending and lending power on shaky ground over the past year, those small operations have faced difficultly growing and stabilizing the economy.
The Obama administration is facing the situation head on. Armed with a new set of lending initiatives, the president is pushing to ensure more small businesses have the financial strength to lead the nation out of the ongoing recession.
"The problem is our small businesses have been some of the hardest hit by this recession," Obama said in remarks on Oct. 21 in Landover, Md. "From the middle of 2007 through the end of 2008, small businesses lost 2.4. million jobs. And because banks shrunk lending in the midst of the financial crisis, it has been difficult to finance inventories, make payrolls or expand if things are going well."
During a media conference call after the address, Small Business Administration head Karen Mills and Gene Sperling, counselor to the Treasury secretary, detailed the president's plan to increase caps on existing SBA loan programs and allow small banks better access to federal bailout funding.
They hope these actions will result in banks being able to provide more lending to small businesses and those establishments, in turn, will increase productivity by hiring more workers.
"These increases are important because there are, in the final analysis, a number of businesses bunched up at the top of our $2 million size level now and we know that there are unmet demands for viable, important growing small businesses in this size range," said Mills.
According to Sperling, the Treasury is enjoying its best relationship ever with the SBA. He said his department understands the need to step up efforts to ensure credit is extended to small businesses which will be the engine of job creation that leads the country toward recovery.
"[Banks have] used the same guidelines as they've always had to determine if they wanted to do a loan," Mills said. "Although the president is making it possible for us to secure these loans, we've got to make sure that the banks are stepping up. Somebody needs to hold their feet to the fire."