President hopes to make loans larger, open up credit
President Barack Obama announced new efforts Wednesday to make operating easier for small businesses.
Obama said he wants Congress to increase the cap on 7a and 504 loans from the Small Business Association from $2 million to $5 million ($5.5 million for manufacturers seeking 504 loans).
The 7a loan is most commonly used to help small businesses get started, while 504 loans are more often used to help small businesses grow. The president said he’d also like to see the cap on small microloans for entrepreneurs and smaller operations increase from $35,000 to $50,000.
Obama asked Treasury Secretary Tim Geithner and SBA Administrator Karen Mills to host a conference with regulators, congressional leaders, lenders and small business owners before the end of the year to discuss new ways to make credit more readily available to small businesses.
Mills said in a statement released Wednesday, “America’s 29 million small businesses have been hard hit in this recession,” but stimulus dollars from the federal government helped soften that punch and allow the SBA to provide 33,000 small-business loans since January.
“But there is much more work to be done,” Mills said. “Increasing maximum loan sizes will allow the SBA to ensure that more small business owners and entrepreneurs can get access to the credit they need to expand their operations and create jobs.”
Making more credit available to small banks and community financial institutions will help the economy expand, Obama said.
“And that’s why we must do more to give these new opportunities to smaller banks so that they have the ability to access capital, so that they can lend to small businesses in their communities,” he said during a media event Wednesday.
“If these institutions put forth a plan to increase lending to small businesses, we will help them get the credit they need to do it at rates that are more affordable than the ones offered to our largest financial institutions,” he said.