Possible Quick Increase in SBA Lending
Small businesses suffering through a bleak economic stretch may get an injection of much-needed capital in the coming weeks.
Hoping to spur continued economic recovery, President Obama met with some of the nation’s top banking officials this week. During their meeting, the president urged lenders to target money toward American small businesses. The gathering included representatives from Bank of America, Wells Fargo, JP Morgan Chase and 10 others.
“Now, no one wants banks making the kinds of risky loans that got us into this situation in the first place,” Obama told reporters after the meeting. “But given the difficulty businesspeople are having as lending has declined, and given the exceptional assistance banks receive to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again.”
Some of the nation’s largest lenders — including those who received billions in taxpayer bailout funds — have already responded positively. Bank of America announced it would boost lending to small businesses in 2010 by $5 billion. Weeks before, JP Morgan Chase made a similar pledge, claiming it would increase lending to small businesses by $4 billion.
The presidential prodding and subsequent pledges to increase small business funding comes at a critical time for many American entrepreneurs.
Small business owners have already burned through about $375 million in stimulus funding allotted to the Small Business Administration. The shortage of funds has the potential to send loan volumes through the floor.
The influx of governmental funds to the SBA’s two most popular loan programs — the 7(a) and the 504 — met with huge demand. Now, entrepreneurs are waiting to see if the government will make good on its desire to restore the added funding through mid-February.
But this week’s news regarding a renewed push to lend by private banks could make the wait a bit less painful.
It might also signal the start of repayment from some of the lenders who got a helping hand from the American public.
“America’s banks received extraordinary assistance from American taxpayers to rebuild their industry, and now that they’re back on their feet, we expect an extraordinary commitment from them to help rebuild our economy,” President Obama said this week.