Obama Speaks on $30 Million Small Business Lending Fund

Obama spoke in the Rose Garden just minutes ago and at 12:20 pm, he'll address the Senate republicans. Read about Obama's small biz initiatives here. Transcript.

Obama Speaks on Small Business Lending in Weekly Address

Transcript

Obama Speaks to Small Businesses in Maryland Video

Obama says the job losses for January, 20,000, is a positive sign, as well as the tick up in manufacturing employment. "These numbers, while positive, are a cause for hope but not celebration," he said. The true engine of job creation will always be business, but government can help. Obama talked about SBA loans and the proposed small business tax credit and lending fund. Read the proposals here.

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Obama Speaks on Small Business Stimulus at Metropolitan Archives Oct. 21

Update: Obama reaffirms his commitment to get small businesses the financing they need. He raised caps on small business loans and said Timothy Geithner and Karen Mills, SBA administrator, will confer with others on how to get more credit flowing to small businesses.

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Obama at White House astronomy night

Obama will speak today at 1:45 pm eastern from Metropolitan Archives, a small business in Maryland. It's likely to be live streamed at cnn.com. A live audio stream will be available at whitehouse.gov/live. I'll post video when it's up. Also today, Obama will interview with NBC's Savannah Guthrie and he'll travel to New Jersey to speak at a rally for Jon Corzine at 6 pm:

President Obama will visit a Maryland business on Wednesday afternoon to announce initiatives to encourage lending to small businesses. According to an administration official, the proposal will increase the caps for existing Small Business Administration loans and give smaller banks better access to funds from the Troubled Assets Relief Program.

An industry official involved in S.B.A. lending said the White House would propose raising the cap on the agency’s flagship 7(a) loan from $2 million to $5 million. But other programs are likely to see increases, too, including the 504 program.

The event will take place at Metropolitan Archives, a records storage company in Landover, northeast of Washington, that financed its warehouse in part with a $2 million loan guarantee under the 504 program, according to Chris Crawford, president of the National Association of Development Companies, which lobbies for nonprofit 504 lenders. NYT

Obama Speech on AIG and Small Business Lending

Some say that nothing legally can be done to stop the AIG bonuses, though Obama may be able to shame AIG. Not sure if that will have any other effect except to quell some of the anger.  

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Some of the details to free up lending for small businesses:

1. Jumpstart Credit Markets For Small Businesses By Purchasing Up to $15 Billion in Securities
Begin Direct Purchases of Securities Backed by Loans from SBA’s 7(a) Program: Traditionally, SBA lending has been supported by an active secondary market, as community banks and other lenders sell the government-guaranteed portion of their loans, providing them with new capital to make additional loans. But since last fall, this secondary market – which has historically supported over 40 percent of SBA’s 7(a) lending program – has frozen up. As a result, both lenders, including community banks and credit unions, and the "pool assemblers" that securitize their loans have been left with government-guaranteed SBA loans and securities on their books. This has prevented them from making or buying new loans. Today, the Treasury Department announces that – in order to get credit moving immediately to small businesses – it will:
Stand Ready to Purchase Securities Backed by 7(a) Loans Packaged Since Last July: Treasury has hired an investment manager who will be authorized to purchase – starting by the end of this month – securities backed by guaranteed portions of 7(a) loans packaged on or after July 1, 2008. This will help clear the backlog of securities that has built up since the beginning of the credit crisis last year, providing pool assemblers and banks with a source of liquidity so that new lending can occur.
Stand Ready to Purchase New 7(a) Securities Packaged Between Now and the End of the Year: Between now and the expiration of Emergency Economic Stabilization Act (EESA) authority on December 31, 2009, Treasury stands ready to purchase new securities backed by the guaranteed portions of 7(a) loans. By making this pledge, Treasury provides assurances to community banks and other lenders that they can sell the new 7(a) loans they make, providing them with cash they can use to extend even more credit.
Make Direct Purchases to Unlock Credit Markets for SBA’s 504 Community Development Loan Program: The SBA’s 504 program combines government-backed loans with mortgage loans from private lenders to provide long-term financing of up to $10 million that directly supports economic development within a community. First-lien mortgage loans made by private-sector lenders – which account for 50 percent of the financing for 504 projects, and are not SBA guaranteed – were often traded in the past on an active secondary market that has frozen in the last year, leaving billions in unsold assets on the books of banks. To get the 504 lending market moving again, Treasury will:
Stand Ready to Purchase Securities Packaged From 504 First-Lien Mortgages: Treasury will stand ready to buy first-lien mortgage securities connected to SBA’s 504 loan program. No later than May, Treasury will begin purchasing securities packaged on or after July 1, 2008 that meet eligibility criteria designed to protect taxpayers.
Prepare to Buy 504 First-Lien Mortgage Securities That Receive New SBA Guarantees: As part of the Recovery Act, SBA is working to develop a secondary market guarantee program for securities issued from pooled 504 first mortgage loans. Once this program is fully implemented by SBA, Treasury will stand ready to purchase these government-guaranteed securities.
Provide Liquidity While Keeping The Secondary Market in Place: These direct purchases of 7(a) and 504 securities will provide liquidity to lenders, including community banks and credit unions, enabling them to restart the process of recycling capital and extending loans. At the same time, the TALF component of the Consumer and Business Lending Initiative will provide investors with an attractive source of financing, allowing them to continue participating in the market. This is intended to keep the existing secondary market in place so that private investors can replace the government as the purchaser of these securities when market conditions return to normal. 2. Temporarily Raise Guarantees to Up to 90 Percent in SBA’s 7(a) Loan Program: The purpose of the 7(a) loan program is to provide a government guarantee that reduces the risk lenders face when they make loans to borrowers who cannot find credit elsewhere. But during the current recession, the guarantees – up to 85 percent for loans at or below $150,000 and up to 75 percent for larger loans – have not been large enough to give banks the confidence they need to lend. As part of its implementation of the Recovery Act, the SBA today announces:
An Increase in Maximum Loan Guarantees to 90 Percent: Beginning today, any lender who participates in the 7(a) program can request a guarantee from the SBA of up to 90 percent for each eligible loan. This temporarily available increase in guarantees will help provide banks with the greater confidence they need to extend credit during the current recession.
A Confidence Boost Lenders Need to Extend Credit: Combined with Treasury’s efforts to unlock secondary markets, higher loan guarantees will ensure that lenders have both greater safeguards against possible credit losses and assurances that there will be an active secondary market to purchase their loans and provide the liquidity they need to keep lending. 3. Temporarily Eliminate SBA Loan Fees to Reduce the Cost of Capital
Elimination of Borrower and Lender Fees for 504 Loans: On any new eligible 504 applications submitted beginning today, SBA will temporarily eliminate the Certified Development Company (CDC) processing fees charged to borrowers and the third-party participation fees charged to lenders. As a temporary provision authorized by the Recovery Act, these measures will reduce costs to both borrowers and lenders participating in the 504 program, which has a demonstrated record of supporting community development and creating jobs.
Read plenty more at WH

Obama talks to reporters

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Obama To Announce Small Business Lending Details

Update: Watch the speech here.
Obama is likely to address AIG today along with details on small business lending.

Politico: President Obama and Treasury Secretary Geithner will join small business owners and community bank lenders at the White House to announce immediate action to ensure that credit – the lifeblood of America's small businesses and its economy – gets flowing again to entrepreneurs and business owners. This marks yet another critical step in implementing the Administration's Financial Stability Plan. Expect details of a new and aggressive effort to unlock the frozen credit markets for small business lending, new reporting requirements on bank lending to small businesses, and plans to temporarily eliminate Small Business Administration loan fees and increase guarantees through Recovery Act funding.

Look for the measures to include: Beginning today, any lender who participates in the 7(a) program can request a guarantee from the SBA of up to 90 percent for each loan. On any new 504 applications submitted beginning today, SBA will eliminate fees charged to lenders and processing fees charged to borrowers. And for any new 7(a) loan, the SBA will temporarily eliminate the up-front fees that lenders pass along to borrowers.