"Because small businesses are so important to our economy," Treasury Secretary Tim Geithner said when delivered his much-panned financial stability plan in February. "We’re going to take additional steps to make it easier for them to get credit from community banks and large banks. By increasing the federally guaranteed portion of SBA loans, and giving more power to the SBA to expedite loan approvals, we believe we can turn around the dramatic decline in SBA lending we have seen in recent months."
The administration is hoping for a more receptive response tomorrow when Geithner and President Obama announce more details about the plan to provide more credit for small businesses. These include details of an effort to unlock frozen credit markets for the Small Business Administration’s major programs – the 7(a) program, which allows small business owners to get up to $2 million in loans, and the 504 program, which provides a guarantee on up to $4 million in financing for economic development projects.
Specifically the administration will announce its intentions to:
* raising guarantees of up to 90 percent in the SBA’s 7(a) loan program, which the Obama administration hopes will provide banks with the greater confidence they need to extend credit during the current recession;
* temporarily lifting SBA loan fees for 504 Loans — fees that can go up to 3.75 percent.