Announcing the proposals at a Small Business Event in Maryland on 21 October, President Obama said: “This Administration is going to stand behind small businesses. …You are our highest priority because we are confident that when you are succeeding, America succeeds.”
The initiatives outlined will use the Troubled Asset Relief Program to lower the cost of capital for smaller banks and community development financial institutions that present plans to the Small Business Administration for increased small business lending through the SBA’s flagship 504 and 7(a) programs.
It will also more than double the maximum size limit of some of its guaranteed loans to small business owners.
The SBA, working with the Treasury Department, plans to increase the maximum size of its 7(a) loans to $5million from $2million. It will also increase the maximum size of its 504 loans, typically used for purchase of land, buildings, and equipment, to $5million from their current size limit of $4million.
Microloans, mostly used for startups or disadvantaged businesses, will increase to $50,000.
SBA administrator Karen Mills said that under the American Recovery and Reinvestment Act, the SBA has already supported more than 33,000 loans for a total of almost $13billion in small business lending, helping to save or create tens of thousands of jobs.
“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,” she said.
