The credit crunch is affecting everyone. What started out as a crushing blow to the mortgage industry and has now spread to consumer loans and small business financing. Banks have tightened their lending criteria and business owners have had to search for alternative means of financing.
Rising defaults have translated into tougher underwriting standards for home owners and small business owners. So how are you going to finance your small business? Well, there’s a shimmer of hope on the horizon… Washington continues to steer additional assistance to the small business community, and some low-cost franchise businesses are still offering financing to qualifying individuals.
As was reported in the Wall Street Journal, Treasury Secretary Timothy Geithner told members of Congress on Monday night that the Obama administration is working on plans to boost liquidity for small businesses as part of their far-reaching efforts to try and spur lending and fend off additional job losses across the country.
We’re all familiar with the Obama administration’s injection of $787 billion into the economy in the form of the recently passed fiscal stimulus plan. The president is also looking to inject capital into the housing market and continues to prop up major corporations like Citigroup and AIG, which have been deemed too large to fail.
The good news is that $730 million from the stimulus plan went to the Small Business Administration to reduce small-business fees and guarantee a greater share of some SBA loans. The Obama budget would authorize the SBA to support $28 billion in lending guarantees.
Additionally, Geithner also announced on Monday that the Obama administration will launch a plan next week that will provide financing, liquidity and guarantees to open up small-business lending. This is a crucial next step to get credit flowing again and spur our economy’s growth once more. The size of the program is unclear and we’ll have to pay close attention to the details as they are announced, but it is a step in the right direction for small business financing.
This entry was posted on Thursday, March 12th, 2009 at 7:44 AM and is filed under Tax News. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
