Yesterday’s announcement from President Obama pledging support for small businesses was welcome news . . . sort of.
Obama backed legislation intended to increase the maximum size of some SBA loans and also committed to additional Treasury Department support for smaller community lenders.
The idea behind increasing maximum loan sizes is to ensure that more small business owners and entrepreneurs can get access to the credit they need to expand their operations and create jobs, something that is sorely needed to give the economic recovery some legs.
While this legislation would help some, I still don’t think it would do much for the majority of small businesses who either don’t wish to take on more debt at this time or who can’t qualify for loans. I can’t understand why we continue to focus almost exclusively on the capital side—even in good times, small businesses have a hard time qualifying for loans. New SBA maximums or not, they will still have to meet stringent lending requirements, even as their bottom lines shrank and their balance sheets tanked in many cases this past year.
I also find it ironic that built into the aid for the small community banks is a caveat that they must pledge to lend to small businesses. While I welcome this, I wonder where that clause was when the big banks got billions. Instead, Citi, Advanta, and others are cutting off credit cards with no warning to their small business clients at the same time they’ve tightened up their lending.