Addressing the credit needs of small business was the focus of a recent forum hosted by the Treasury Department and the Small Business Administration. The Small Business Financing Forum, on Wednesday, November 18, sought to find the best ideas and strategies for expanding access to financing for small businesses. The forum, which President Obama called for last month, featured Treasury Secretary Timothy Geithner, SBA Administrator Karen Mills, U.S. Senate Committee on Small Business and Entrepreneurship Chair Sen. Mary Landrieu (D-LA), as well as small business owners and others.
Opening the forum, Geithner stressed that, although credit terms are finally easing, "small businesses, in particular, are still facing a very challenging credit environment," and they are more vulnerable to the aftereffects of financial crises. Large businesses get only about 30 percent of their credit from banks, compared to about 90 percent for small businesses, so, he said, "when banks pull back, small businesses are more at risk."
Geithner then briefly outlined six "critical elements" currently in play for an effective response to help small business owners, including the direct support of the Recovery Act and new programs announced last month to provide low-cost capital to community banks. In addition, Geithner noted that banks must "get back to the business of lending ... and investing in the promise of American innovation," adding that "we need banks to be working in support of recovery, not against recovery."
In her remarks, SBA's Mills said it's important to ensure that small businesses have the tools they need to grow and prosper, hence the focus on access to capital. Since SBA reduced its fees and increased guarantees to 90 percent on SBA's flagship 7a program, the "formula worked," she said, noting that SBA volume has increased approximately 75 percent compared to the weeks before the Recovery Act.
Sen. Landrieu remarked, "Now that we have stabilized Wall Street, we must jumpstart Main Street. We can do this by making sure small businesses have access to the capital they need to keep their businesses alive and growing during these tough times." Last month, Landrieu introduced S. 1832, "The Small Business Access to Capital Act," which increases small business loan limits from $2 million to as high as $5.5 million. The bill seeks to spur small business growth and aid in the nation's continued economic recovery. --David Grogan