Watching the government bail out industry giants on Wall Street with billions of dollars in aid may seem disheartening for small business owners. But on March 19, 2009, in an effort to support Main Street as well, President Barack Obama and US Treasury Secretary Timothy Geithner announced a new initiative to help small businesses stay afloat.
In a meeting with small business owners, Obama called small businesses "the heart of the American economy" and introduced a plan that would pump $15 billion of lending money to banks and businesses. "[Small businesses] are responsible for half of all private sector jobs—and they created roughly 70% of all new jobs in the past decade," the President said.
As early as the end of this month, the Treasury Department will start making "direct purchases of securities backed by loans guaranteed by the Small Business Administration," (New York Times, March 16, 2009). This is in hopes of jump-starting the secondary market, where lenders can sell parts of a loan to build capital for additional loans, a process which the economic crisis has impacted severely.
Here are the main provisions of this latest governmental aid program aimed at supporting small business:
US Treasury Secretary Timothy Geithner cautioned lenders. "Banks need to make the extra effort to make sure that good loans are getting to creditworthy small businesses in order to serve the larger public good of moving this nation to recovery," (Chicago Tribune, March 16, 2009).
While elements of this aid program may not help or be the ideal solution for all small business owners, the government is attempting to focus on a range of market segments, not just Wall Street. "You deserve a chance," President Obama stated. "America needs you to have a chance."
"Obama Acts to Aid Small Businesses" by Helene Cooper. New York Times, March 16, 2009.
"U.S. Proposal Aims to Aid Smaller Companies" by Simona Covel and Kelly K. Spors. Wall Street Journal, March 17, 2009.
"Obama tries to loosen credit for small businesses" by Ben Feller. Associated Press, March 16, 2009.
"Small businesses to get tax breaks, loan help" by Laura Petrecca. USA Today, March 16, 2009.
"Obama administration throws credit lifeline to small business" by Maura Reynolds. Chicago Tribune, March 17, 2009.
"Breakdown of Obama economic initiatives announced Monday." Associated Press, March 16, 2009.
"Obama, Geithner Outline Plans to Help Small Businesses" by WSJ Staff. Wall Street Journal Blogs, March 16, 2009.
"Remarks By The President To Small Business Owners, Community Lenders And Members Of Congress." White House Briefing, March 16, 2009.