With the credit markets as frozen as they are, it is difficult for many small businesses to get the loans they need to grow. Today, President Barack Obama announced new plans for immediate action to bring America’s credit markets back to life for small business owners.
Small business are a major component of the American economy. Obama said that small businesses are “one of the biggest drivers of employment that we have” and said his staff is “working diligently to increase liquidity throughout the financial system.”
Christina Romer, the head of the Council of Economic Advisers, said the government would pump “a significant amount” of money into boosting small business lending, but she did not reveal a total figure prior to today’s announcement by the president.
“We know that small businesses are the engine of growth in the economy, and we absolutely want to do things to help them,” Romer said on NBC’s “Meet the Press” this week.
The first program allows small businesses to obtain loans of up to $2 million that would be backed by the federal government through the SBA. The federal government would temporarily increase the loan guarantee to 90% to encourage banks to lend. The federal government currently guarantees 85% of the loans below $150,000 and up to 75% of larger loans. This increased guarantee is designed to give lenders more confidence and to loosen up credit for small businesses.
The second program, the “504 program”, guarantees up to $4 million in economic development projects for small businesses. Obama’s administration will temporarily eliminate fees for lenders and borrowers on any new 504 applications. This should reduce the costs to both borrowers and lenders in the program, administration officials said.
As President Barack Obama seeks to get Congressional approval for an economic stimulus package by mid February, it is interesting to look at where the proposed stimulus would create jobs. The Wall Street Journal has released information about where jobs would be created, as released in a report by the Bureau of Labor Statistics. The total number of jobs expected to be created is 3,675,000.
The most jobs will be created in government jobs as government spending increases. Construction jobs, which will increase by almost 7 million jobs, will experience the largest percentage increase in jobs.
Millions flocked to Washington, DC this weekend and waited for hours in sub-freezing temperatures to witness the historic inauguration of Barack Obama, an event that will cost a cool $170 million.
Extensive security costs along with the countless inaugural parties and “endless rentals” really run up the bill for the weekend, which is jam-packed full of events.
The swearing in ceremony itself cost $1.24 million.
The federal government estimates that it will spend approximately $49 million for the inaugural weekend, with the rest of the total coming from private donors.
“We have a budget of roughly $45 million, maybe a little bit more,” Linda Douglass, spokeswoman for the inaugural committee. That’s more than the $42.3 million in private funds spent by President Bush’s committee in 2005 or the $33 million spent for Bill Clinton in 1993.
“The money is going toward providing events which we hope are going to connect people, make them feel like we are all in this together and reinforce the notion that when we pull together, we’re stronger,” Douglass said. “And we need to pull together to face the challenges that are before us today.”
Washington, DC along with Virginia and Maryland have also requested $75 million from the federal government to help pay for inaugural necessities, like extra police, fire and medical services.
Despite all the donations, Obama’s team has made donations much more restrictive than in the past. Obama has capped individual donations to $50,000 per person, substantially lower than the $250,000 cap that President George W. Bush put on his inauguration. Notable donors include Microsoft CEO Steve Ballmer and Google founder Larry Page.