Yesterday I mentioned that the President was going to announce a new small business lending plan. The NY Times reports that the new plan includes provisions to lower the lending rate to 2% for community banks with less than $1 billion in assets, so they can pass those lower rates along to small business, and proposes to raise the caps on some of the SBA’s most popular small business loan programs from $2 million to $5 million.
The administration will require community lenders to provide evidence as to how they will increase small business lending with quarterly reporting.
One possible glitch has already been identified, as the lower rates come with limitations on executive compensation as other relief money does these days. The administration seems to think that this won’t be a problem, but a Cam Fine, president of Independent Community Bankers of America, a trade association, thinks that the family owned community banks will balk at the idea and choose not to participate because their capital is family money.
Only time will tell how much this new lending plan will help small business, but I am encouraged by the grass roots approach that the administration is taking. Hopefully the small community lenders will rise to the occasion.
Susan Martin, Small Business Financial Management
