Obama to unveil proposals to help small businesses

WASHINGTON -- Amid misgivings over his spending blueprint, President Barack Obama has decided to provide billions of dollars in federal lending aid aimed at struggling small business owners.

The broad package of measures to be announced Monday includes $730 million from the stimulus plan that will immediately reduce small-business lending fees and increase the government guarantee on some Small Business Administration loans to 90%. The government also will take aggressive steps to boost bank liquidity with more than $10 billion aimed at unfreezing the secondary credit market, according to officials briefed on the plan who demanded anonymity to avoid pre-empting the president's announcement.

"It's a huge step in the right direction," Giovanni Coratolo, director of Small Business Policy at the U.S. Chamber of Commerce, said Saturday. "In this economy, having the least amount of risk for banks will incentivize banks to lend to small businesses. A lot of small businesses will benefit from this."

Obama will announce the new measures with Treasury Secretary Timothy Geithner at the White House.

They come as Republicans have sought to build on some bipartisan misgivings over Obama's ambitious spending blueprint. In particular, Republicans say Obama's budget proposal to raise taxes, starting in 2011, on individuals earning more than $200,000 and on households earning more than $250,000 will hurt small businesses which face higher dividend taxes and limits on itemized deductions.

The administration's proposals to improve worker access to health care and address climate change also could add higher health and energy costs to small businesses. The Obama administration maintains that revenue from auctioning off carbon emission allowances would offset much of the higher energy costs for many Americans.

The new measures taking effect Monday focus on opening up small-business lending that is seen as critical to community growth. While the SBA typically guarantees $20 billion in loans annually, new lending this year is on track to fall below $10 billion, according to the administration.