Is $30 Billion Enough To Stimulate Small-Business Growth?
Posted on December 14, 2010 by Nathan R Mitchell, One of Thousands of Business Coaches on Noomii.
Nathan R Mitchell|Clutch Consulting LLC|Small-business Consultant|Tulsa OK|Springfield MO|Dallas TX addresses Obama's attempt to grow small business
In the coming days the U.S. Treasury will set forth the requirements that community banks must meet to borrow against a $30 billion lending fund that has been designed to help small business growth and expansion. Unfortunately, the Obama administration’s attempt to increase small-business lending by banks who have been hesitant to lend in the down economy, is facing challenges before it has even been officially launched. It’s simply unclear whether or not this new plan is enough to overcome the current fears and reluctance of banks to make small-business loans, despite the enticement for smaller banks to borrow against the fund at an interest rate of as little as 1%.
Is an increase in small-business lending enough to help stimulate small-business growth, or would a decrease in overall taxes for small-business owners be more beneficial for the economy? It is evident that banks have been reluctant to lend, despite the administration’s attempt to aid small businesses through increased funding. This is largely the result of toughening standards by loan regulators in the wake of the economic crisis.
The U.S. Treasury is hopeful that its new small-business lending program will help stimulate community bank lending because it gives them access to extra capital at a cheap cost. If banks boost lending by as little as 10%, they will see their interest rate fall to as low a 1%. Treasury officials say that they have received positive support for the program from community banks, and that they are dedicated to do whatever is necessary to make sure the program is a success.
They are noted as saying that the extra padding provided to banks through lower interest rates is sufficient enough to offset the increases in regulatory pressures.
Why is all of this so important? Small-businesses accounted for roughly 65% of all new jobs created in the United States between 1993 and 2009.
Keep Winning,
Nathan R Mitchell
www.clutchconsulting.net
