Washington is set to commence its most undeviating effort to revitalize small business lending since the financial crisis with a plan to invest up to $30 billion of federal money in small banks and give them incentives to re-lend that money to Main Street companies.
Polls suggest the public's ongoing economic anxieties are costing the Democrats politically. Party leaders hope that if they show they're focused on jobs, they can hold down their losses.
According to Richard Carbo, spokesman for the Senate Committee on Small Business, the full bill, which includes business tax breaks and enhancements to Small Business Administration loan programs, could come to a vote as soon as July 27. The House passed a version June 18.
Bank lending to small businesses has dropped to $670 billion from $710 billion since 2008, according to data filed with regulators. Obama and Federal Reserve Chairman Ben Bernanke have connected the drop in small business credit to weak job growth and urged banks to increase the flow of loans to creditworthy businesses. Bernanke told a forum on small business July 12 that “The formation and growth of small businesses depends critically on access to credit. Unfortunately, those businesses report that credit conditions remain very difficult.”
"Americans are still asking the question, 'Where are the jobs?' " said House Minority Leader John Boehner (R., Ohio). "All President Obama has to offer them is more stimulus spending, more debt, higher taxes, and more job-killing regulations."