The Independent Community Bankers of America are expected to back the Obama plans to get capital in the hands of small business owners through local, community banks, presumably through the SBA 7(a) and 504 loan programs.
The community bank would benefit from the 30 billion fund:
In a statement released on February 2, 2010 the ICBA said they are“strongly supportive of the proposal announced today by the President”. The plan would move funds that have been paid back from TARP to the community backs that have less than 10 billion in assets. Not only would the community banks receive the funds, they would also be reworded for how much they lend. The more they lend the lower the interest they would have to pay on a dividend to the government. An increase of 10% would lower the interest to 1%.
The small business owner would benefit from the 30 billion funds:
Small business has struggled in the past finding banks that are willing to lend capital. Many banks both large and small have been increasing the restrictions on lending standers. Having the 30 billion available to the local banks would open up opportunities that the business owner has not had in recent years. In Obama’s prepared remarks he is expected to say, “These are the small, local banks that work most closely with our small businesses — that provide them their first loan, and watch them grow through good times and bad,”
The White House is asking for bipartisanship with the Obama Small Business Plan. However, some would disagree that TARP fund go to community banks saying that it was not the original intention of the bail out. Others like Rep. Nydia M. Velázquez (D-N.Y.), chairwoman of the House Committee on Small Business, say that the SBA (Small Business Administration) would be best equipped to lend the money directly to small business owners. In a statement she said for small business that needs to know how to get SBA funding, it would be best handled by the SBA itself, it has the personnel and experience to get the job done and help build business credit.
The Obama Small Business Loans Plan will need congresses approval. It is expected that the President will be campaigning for the proposal.
Get more information about the ICBA and the statement about the Presidents small business fund.
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So Obama is going to free up the loans to small businesses?
The Banking System Doesn’t Need More Money
As a small business owner with a lot of friends who also own small businesses, I get tired of hearing all the news stories about how small business lending is going to get a shot in the arm from President Obama’s programs or any other source in the foreseeable future. Yesterday I listened to a speaker from one of the large banks talk about how many loans the bank was making, doing its share to get the country moving again. All the banks are simply not making business loans unless they are absolutely gold-plated. Period. This isn’t because they don’t want to make loans; it’s because they’re being criticized by examiners.
The regulators have made it clear to banks that they will be criticized for any loan where the borrower takes out any cash, regardless of the underlying fundamentals or collateral. This is nonsensical.
This story has been truncated, see the whole story at: http://www.mrmissionpossible.com/blog/auto-salvage-consulting/obamas-30-billion-small-business-plan-more-money-isnt-needed/
Ron Sturgeon
5940 Eden
Ft. Worth TX 76117
Ron,
I have to say that you have valid points. I cannot disagree with you. The banks need to find a way to loosen up the guidelines some what in order to start funding loans again. I did visit your website and will be going back to read more. Your comment is somewhat long and I had to cut it down. If you would like to guest post please contact me by using the contact form. http://www.sbaloans-123.com/about-us
Thanks Rob
Barack Obama’s book, “The Audacity of Hope,” features a catchy title. It has an idea of bravery mixed confidently. You’ll find nothing Pollyanna regarding it. I would possibly not support everything he tells, but he’s our president, as well as for me, he creates belief. That can do more for a region than any volume of backroom deals. Hope gives us energy, and energy sustains us through trying times. Boy, we’ve had them. I’m from West Texas, and I did not vote for Bush. When McCain ran against Obama, I used to be a citizen of Arizona, but I gave audacious hope a chance. The fight for progress and laying the foundations of prosperity is just not over. I’ve seen the quips of those that don’t believe Obama is able to do it. But step back a second. Would anyone have most of us fail simply to tarnish the star of an incumbent for whom they did not vote? Keeping our priorities straight, let’s work together with this president and build our future.
I hope something gets aproved. I have been searching for commercial loans for a year and everyone is still on hold. I cant wait till everything is back to normal
Hang in there, help is on the way. We are seeing some lenders start to fund loans again. That’s how they make money, so keep trying, it will happen for you.
Thats good news for both parties but loan no matter how appealing they may seem its not always solution with result being debt.
No bank is making business loans unless they are absolutely gold-plated. I want to see how things will turn out.
I just talked to a commercial banker yesterday, he has funded 2 loans this week. maybe things are turning around for small business owners looking for a loan.
Rob
I agree that a small business should avoid debit as much as possible, however sometimes it is necessary.
Rob
Yea! What up Republicans! At least he is moving forward with a plan.
yes I agree, he has a plan
Also of interest in this post are the comments from small business owner Ron Sturgeon who has some things to say about the degree to which promised funding has helped small business thus far. Simply, it hasn’t. It’s hard to understand how, given the current economy, any loan terms dictated by government regulators would be helpful to most small businesses even if they got one or how banks can remain a viable part of the economy if they don’t plan to loan money to the private sector.
thanks for stopping by
Time will tell how this turns out. It’s small business that can help see our way out of this economy through additional hiring. Unfortunately, just try getting a small business loan.. easier said than done.
Yeah, we’ll see how much this stimulus helps….. hoping for the best.
I echo this from across the globe. Banks are just not taking risk at all. I am an interested stakeholder for short term loans or payday loans and the effects this has on our lending practices.
The problem with consumer debt is that it must be paid off by the sweat of your brow. Clothes and food and dishes and kitchen gadgets and “stuff” all depreciate rapidly. In most cases, you’d be lucky to get pennies on the dollar when you tried to resell your stuff, even if it was barely used.
Cars depreciate, too, but not nearly as fast as consumer goods.
This is a unique quality of consumer debt when compared to secured debt. Debt that is secured can usually be cleared by simply selling whatever was used to secure the debt.
The Problem with Consumer Debt
Consumer debt, on the other hand, cannot be cleared by selling the items you purchased. Unfortunately, you will have to work off the debt — or settle it, or declare bankruptcy. And none of those is much fun.
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