From the Biz Box by Steve Viuker
On July 12, a forum called “Strengthening the Lending Environmentfor America’s Small Businesses”, was held in Washington, D.C.
It was sponsored by the Federal Reserve Board and featured comments by Fed Chairman Ben Bernanke. The Chairman urged banks and regulators to help the nation’s small businesses get the loans they needed to create jobs. Federal data indicate that lending to such companies fell to below $670 billion in the first quarter of this year from more than $710 billion in the second quarter of 2008.
Also speaking was SBA Administrator Karen Mills. Below are her comments to BizBox about small business issues and a link to her speech in Washington.
Small business is at the heart of the economy; so it needs to be at the heart of the recovery. They were most affected by the credit freeze. Big businesses have other options. The SBA has been able to make a difference at the end of the credit spectrum. The Recovery Act has allowed us to provide $30 billion worth of credit access.
SBLF- The mainstay of the Recovery Act program was to increase our guarantees to 90% and to reduce and/or eliminate our fees. One aspect of the Small Business Jobs bill is the Small Business Lending Fund. Why aren't banks lending? There are two reasons. One is that they don't want to take the risk. That is why the 90% guarantee is important. The other reason is lack of capital. The SBLF is $30 billion into hands of Main Street community banks. The access to this capital to these institutions will be as low as one percent. That is providing they increase lending to small businesses. And it won't cost $30 billion because the banks will pay the money back and also invest these funds and have multiples returns.
The job of the SBA's Office of Advocacy is to point out when the needs of small businesses have to be taken into account in terms of the cost that regulations would impose on them. We look at Sarbanes/Oxley and all other compliance regulations.
The SBA looks at small business from traditional dry cleaners and restaurants to the high-growth entrepreneurs. One aspect that has picked up momentum is the green sector. There are innovations and opportunities that are creating new jobs. We want to make sure that these businesses have access to capital and to programs such as the SBIR program. (innovation research grants)
We have 28 disaster assistance locations in the affected states. We offer advice and economic injury loans to businesses that have been affected by the spill and the ban on fishing. In addition, if a business has an SBA loan from a Katrina-related loss, that business can defer payments on that loan.
Political SupportSupport for Small Business jobs bill in front of Congress is coming from both sides of the aisle. Small business creates the jobs in this country; government is there to see they are aided in that process.