Top Banks Cut Small Business Lending By $8 Billion

According to a White House official, president Obama is planning to visit a small business in Maryland on Wednesday to present a series of initiatives aimed at increasing bank lending to small businesses.

The programs the President will reveal include an increase in the maximum amount businesses can borrow through the Small Business Administration’s primary loan program, which currently stands at $2 million. In addition, the Treasury Department will expand access for smaller banks to the Troubled Asset Relief Program (TARP), a move aimed at spurring more local lending by community banks.

The TARP program was set up to recapitalize banks so that they would boost their lending to consumers and small businesses. In March, as the administration and the SBA took steps to stimulate small business lending, Treasury Secretary Tim Geithner ordered the top TARP recipients to begin sending the Treasury monthly reports on their small business lending activity.

As unemployment nears 10%, lawmakers are worried about the ripple effect of the credit crack down. Small businesses employ half of America’s non-government workers and traditionally create most of the country’s new jobs, according to government estimates. Read more…

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