WASHINGTON — The Treasury Department and the Small Business Administration (SBA) are collaborating on a new initiative designed to make it easier for community banks to obtain capital and raise the funding limit for SBA loans.
Under the plan unveiled last week, banks with assets of less than $1 billion will be able to borrow capital from the government at a 3% dividend rate. To qualify, banks will need to submit a small-business lending plan showing how the money will expand their small-business lending.
“Of all the steps we're taking to move this economy from recession to recovery, I continue to believe that the success of our small businesses will be a foundation upon which our future prosperity is built,” President Obama said in an address from the family-owned Metropolitan Archives in Landover, Md., where he announced the new initiative. “So we will continue to do whatever we can to help these businesses grow and thrive. And I am confident that the steps we announced today will do just that for small-business owners across the country.”
In his address, Obama also supported Congressional efforts to increase the ceiling on SBA loans. The proposed legislation would lift the maximum under SBA’s major lending programs to $5 million and increase the maximum size for SBA-backed microloans to $50,000.
“While we have made progress stabilizing the financial system, we need to do more to help small businesses get the credit they need to grow and hire,” Treasury Secretary Timothy Geithner said in a written statement. “The President’s announcement ... has a simple goal: help small businesses by helping the community banks whose business it is to serve them.”