A sampling of business leaders around the Washington area found mixed reactions and little enthusiasm for President Obama’s proposed boost to small banks and businesses.
During his State of the Union address, Obama proposed “that we take $30 billion of the money Wall Street banks have repaid [from the federal bailout] and use it to help community banks give small businesses the credit they need to stay afloat.”
The White House released further details this week, saying the $30 billion would be used for establishing the Small Business Lending Fund. It will be available for all local and small banks with assets less than $10 billion. Participating banks would get up to five years of reductions in the dividend tax rate they pay Uncle Sam.
The president of the Arlington Chamber of Commerce, Richard Doud, saw two reasons Obama’s proposal might not help small businesses grow and create jobs.
“Small loans are available only for those with perfect credit,” Doud said. He suggested that the criteria for the loans need to be lowered a bit, but also warned that this needs to be done very carefully, “as nobody wants the banks to get in trouble again.”
Doud pointed out that $30 billion might not be enough. “It’s going to help a little bit,” he said, “but it’s not going to cure the problem.”
Martin Kohn of the National Small Business Association also worried that it would be difficult for merchants to qualify for the funds.
“In order to get a loan, they have to prove” they meet certain financial requirements, Kohn said. “Business is slow and in order to pick it up, they need more inventory. And in order to do so they need a credit from a bank.”
The head of the Alexandria Chamber of Commerce, Tina Leone, said she heard back in November that the president was considering using funds paid back from the bailout of major banks to stimulate small business.
If the program happens, Leone said, “our entrepreneurs will have the breathing room they need to pursue the economic opportunities which will grow our economy and tax base.”
But Bill Rys, tax counsel for the National Federation of Independent Businesses, said that although the Obama plan might help small businesses keep up with payroll, their problems run deeper.
“Sales and economic activities are down so balance sheets are way off,” Rys said. “That’s why, first, we need to make sure that the economy is up and running.”
