Small businesses historically have created about 70 percent of the economy's new jobs. That's why many economic observers have to date criticized the federal government's stimulus program for focusing, they say, on Wall Street rather than on Main Street.
Working to restart the economy's engine of job creation, President Obama announced yesterday that the Treasury Department will invest as much as $15 billion to boost lending to credit-hungry small businesses. Under the new program, the Treasury Department will buy as much as $15 billion in loans made by banks and guaranteed by the Small Business Administration (SBA); the SBA's loan volume has fallen from roughly $20 billion a year to below $10 billion this year, projections show. The funding for the program will come from the government's $700-billion financial rescue package enacted last fall.
In addition to buying loans, the administration is proceeding with plans to eliminate fees for borrowers and reduce fees for lenders in its two signature small-business lending programs and to increase temporarily the percentage of each SBA loan guaranteed by the government. The Internal Revenue Service also released information Monday on a provision of the stimulus bill passed last month that would allow small businesses to use losses incurred in 2008 to get refunds of taxes paid on income earned as far back as 2003--an increase over the former two-year limit.
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