Senate OKs $30 Billion Loan Fund for Small Businesses
September 21, 2010
After months of partisan wrangling, the Senate passed legislation on September 16 that includes a controversial $30 billion fund to help community banks make loans to small businesses. The bill is expected to easily pass the House because it already approved similar legislation, says USA Today.
Once President Obama signs the bill, hundreds of companies waiting in the Small Business Administration (SBA) "Recovery Act Queue" will be able to get loans, get larger loans and have loan fees waived. Those not getting SBA-backed loans also will reap benefits, such as $12 billion in tax breaks.
Yet while many politicians and small businesses are celebrating, others are grumbling, says USA Today.
- The $30 billion lending fund was one of the largest points of contention.
- That fund would allow about 8,000 community banks with assets of up to $10 billion to give loans to small businesses.
- Opponents view the fund as a smaller version of the maligned large-bank bailout program, the Troubled Asset Relief Program (TARP).
- Others are concerned about how the provisions will be implemented and if small businesses will really tap into the new capital.
Entrepreneur Jason Jacobs says many businesses won't even borrow money to expand or hire new workers until they are confident that the economy is improving.
Yet supporters say this fund is needed.
- Entrepreneur Steve Smith, from Cedar Rapids, Iowa, has considered purchasing a manufacturing or service business.
- Smith says the increased loan limits -- such as the rise from $2 million to $5 million on a loan to purchase real estate -- would give him more incentive to do so.
- Joseph Roth, who runs a family medical practice in Delton, Mich., says he'll save about $17,000 on a loan to open a new office building.
Source: Laura Petrecca, "Senate OKs $30 Billion Loan Fund for Small Businesses," USA Today, September 17, 2010.
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