Administration Considers Bailout Funds for Small Businesses

[cal04]

Proposal Would Take Money From $700B Program for Banking System
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/10/AR2009071003206.html

The Obama administration is developing an initiative to take money from the $700 billion program for the banking system and make it available to millions of small businesses, which officials say are essential to any economic recovery because they employ so many people, according to sources familiar with the plan.

The new effort -- which would represent a striking shift from the rescue program's original mandate -- would direct billions of bailout dollars toward a program that aims more at saving jobs than righting the financial system.

A proposal being floated by senior Treasury Department officials calls for using the bailout funds to expand an existing government program that helps small companies borrow money from banks a low rates to keep their businesses going, the source said. These "working capital" loans would come with few restrictions and could be used for buying inventory, holding onto employees and paying off short-term debt.

The initiative would expand a Small Business Administration lending program called 7(a), the agency's most popular lending program. Lines of credit for small companies could greatly increase in size. If the firm failed despite receiving this help, the government would cover most of the losses on the federal loan, perhaps as much as 90 percent. Lines of credit act like the credit cards for companies -- short-term revolving debt used to pay a variety of immediate expenses.

[earthboundmisfit]

1. Now THIS makes sense.

And should have been done at the beginning.

[elehhhhna]

2. look it up -- most sba $$$ goes to mega-corporations. No dice. Reform HC instead.

[midnight]

3. I hope 7a gives small business access to lines of credit without any inspection.

You know like the bankers were given.

[Stinky The Clown]

4. I think this great ...... but .........

....... I hope it recognizes the differences between "small" business and *really* small business.

A mom and pop lawn moing company is very different from a multimillion dollar widget business. Not that one is more deserving, just that their needs are so different that different rules ought to apply.

[girl gone mad]

5. Too bad it will NEVER happen.

A thorough reading of the article makes it apparent that the administration has no intentions of seeing this through.