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United States President Barack Obama - Source: Reuters
US President Barack Obama will announce a package of initiatives
to increase credit to small businesses, an administration official
said.
"The proposal will increase the caps for existing SBA (Small
Business Administration) loans and give small banks better access
to TARP funding to encourage more lending to small business," the
official said.
While the credit crunch that threatened the economy earlier this
year has been easing, small businesses that typically drive
employment growth in the United States are still facing borrowing
constraints.
"They're more dependent on banks. They're more dependent on credit
cards, home equity loans, other types of things that got washed
away by this crisis," US Treasury Secretary Timothy Geithner told
CNBC on Friday.
The Obama administration has been looking at ways to increase
access to credit for small businesses.
The Washington Post reported on Tuesday the administration this
week planned to ask Congress to raise the ceiling on the amount of
money companies can receive from the Small Business
Administration's major lending programmes.
The Post, citing sources, said the Treasury also was close to
finalizing a plan to use bailout funds to help community banks lend
to small businesses.
Herb Allison, the head of the Troubled Assets Relief Program, said
in late September Treasury would soon launch a programme aimed at
aiding small businesses by purchasing up to $20 billion in
securities backed by loans guaranteed by the Small Business
Administration.
The Obama administration in May temporarily relaxed restrictions on
the size of businesses allowed to apply for small business
loans.
The move was expected to allow some 70,000 additional firms to
apply for Small Business Administration 7(a) loan programme through
September 30, 2010.
The move was expected to particularly aid auto dealerships that have been squeezed by tight credit.
