Tuesday, June 01, 2010

New Credit Initiative to Boost Lending to Small Businesses

Owning your own business is a rewarding path for many people toward wealth and personal success. Small businesses are what drive the national economy and that’s why I support more funding toward small business lending. It would be especially rewarding to see more funding extended to businesses that otherwise have difficulty with funding from large banks.
The House of Representatives is expected to take action on a proposed $2 billion grant initiative that could bring about billions in lending to small businesses, especially women and minority owned businesses that might be having a hard time getting credit. It’s for these reasons I enjoy sharing with others my personal success story.

The initiative, modeled after state capital access programs, would require states to pay $10 of lending for every $1 of federal funding they received. According to the Wall Street Journal, this new policy will work alongside the Treasury’s small business fund. The small business fund is specifically designed for community banks that are based in neighborhoods, as opposed to the larger Wall Street financial firms.

The real question is whether this proposed fund will truly help increase lending or if it will exhibit some of the same weaknesses as the Troubled Asset Relief Program (TARP)’s capital purchase program -- which has not necessarily seen an increase in lending as was expected. Hopefully, there will be safeguards in place to make sure the initiative delivers results. Our economy would also benefit from the creation of much needed jobs through this measure.

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