WASHINGTON — The Small Business Lending Fund Act, a $30 billion proposal by President Barack Obama to spur lending to small businesses, recently cleared the House Financial Services Committee. The 42-23 party-line vote garnered no Republican support.
The legislation aims to inject $30 billion into community banks, which will use the capital to make loans to small businesses wanting to hire new employees and expand their operations. In return, the banks are to pay the government a dividend, the rate of which will decline as each bank’s lending increases.
“Small businesses are the backbone of the American economy, and where most new jobs begin,” Obama said in a statement. “But one of the major challenges facing small-business owners is access to the credit that they need to grow and hire.”
Republicans opposed the plan, arguing that it would encourage more government involvement in private businesses. Democrats noted that the program is separate from the Troubled Asset Relief Program (TARP) and requires accountability and oversight from Congress, the General Accounting Office (GAO), and the Treasury Department’s Inspector General.
“Today, Congress made progress on legislation that will foster more lending to America’s small businesses — the backbone of our economy,” House Speaker Nancy Pelosi said in a prepared statement. “By encouraging community banks to increase lending, we are supporting the small businesses on America’s main streets in their efforts to grow and create jobs.”
The legislation will be brought up for a vote soon in the full House of Representatives, Pelosi says.