President Barack Obama’s administration pledged new government-backed lending to small businesses, as an economic recovery that is helping multinational corporations eludes Main Street companies.
The U.S. Small Business Administration introduced two programs of expedited lending guarantees for banks or community lenders giving loans of as much as $250,000 to small businesses, SBA Administrator Karen Mills said today.
While chief executive officers of thriving companies such as Honeywell International Inc. and General Electric Co. met with Obama at the White House today, Mills said smaller companies are still struggling amid a lack of demand and credit.
“This recovery has not been robust for small businesses,” Mills said in an interview at Bloomberg’s offices in Washington. “I hear that business is coming back — slowly.”
The lending programs, which are aimed at “underserved communities” such as poor neighborhoods, are the latest in a series of efforts by the Obama administration to get more capital to companies with fewer than 500 employees. Optimism among those companies, which government economists say are responsible for the majority of job growth, is still at recessionary levels, the National Federation of Independent Business said in a report this month.
Corporate profits in the third quarter exceeded the 2006 high before the recession, and optimism among the 193 CEOs in the Business Roundtable is at the highest level since 2006, as they project increased sales, investment and hiring, according to a survey the Washington-based association released yesterday.
The Obama administration and Congress authorized increased government guarantees and the suspension of fees for SBA loans in the stimulus bill last year, and that program was extended in a small-business lending bill approved by Congress this year. A $30 billion lending facility that was also included in that measure, which will channel funds to community banks, is set to begin operating soon, Mills said.
One of the initiatives announced today will provide an SBA guarantee of 75 percent to 85 percent for loans of as much as $250,000, with guaranteed approval within one business day. A separate program will provide those same terms to micro-lending intermediaries, faith-based lenders and community development organizations. Both programs will be operating before March 15, according to the SBA.
“There are gaps in the marketplace that are not being met,” Mills said.
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