Monday, March 16, 2009

Meaningless Obama Drivel, Part 48,651: SBA

The article is written as though the propaganda is meaningful...

Seeking to counter a chorus of unhappy Republicans and nervous Wall Street investors, President Barack Obama and his economic team are taking a cheerier tone while making billions in federal loans available to the nation's struggling small businesses.

Obama and Treasury Secretary Timothy Geithner on Monday planned to announce a broad package that includes reduced small-business lending fees and an increase on the guarantee to some Small Business Administration loans.

Huh? And Cantor bought in?

"We've got to do something to help these small-business people. We know that they're the job creators in this economy," the House Republicans' No. 2 official, Rep. Eric Cantor, said Sunday

The vague outline:

The new measures taking effect Monday focus on opening up small-business lending, seen as critical to cities' growth. While the SBA typically guarantees $20 billion in loans annually, new lending this year is on track to fall below $10 billion, according to the administration.

Under the two-month-old administration's new initiative, the government will step in to buy these loans to help unlock the frozen credit market, using money from the recently passed bailout package in the range of between $10 billion to $20 billion, one official briefed on the plan said.

The other measures are part of Geithner's financial stability plan announced last month. They involve temporarily eliminating upfront fees of up to 3.75 percent and some processing charges on certain SBA loans that lenders typically pass along to borrowers. It also increases the government guarantees on certain loans to 90 percent, up from 85 percent for loans below $150,000 and 75 percent for larger loans.

This is pure poppycock. Anyone who is an SBA lender will tell you that while there was a period late last year when SBA lending froze up, it's just fine and dandy these days. There is really no shortage of funding.

But there IS a shortage of viable business plans, with the inevitable result that SBA loans are not being generated in volume.

Banks will make the loans--if there's a repayment in sight.

No comments: