Obama’s Small Business Loan Fund Stalling

Obama’s Small Business Lending Fund was proposed in his State of the Union address last January 27th, and yet more than a month later, business owners still do not know the details of the plan.  Mr. Obama claimed that local banks are more supportive for small businesses, and thus they will receive the $30 billion in repaid TARP funds to help continue to prop up small businesses suffering from a poor economy and a lack of credit.

According to the White House, community banks comprise 20% of banking assets and yet provide over 50% of the small businesses in the United States with funding.

Yet on the other hand, many small banks are rejecting the tarp money as they view it as tainted aid.  AZbiz.com reported John P. Lewis, Southern Arizona Community Bank President saying, “We voiced our concerns in the board meeting. We reacted very negatively to the message coming from the Treasury. We made it crystal clear that having access to $30 billion does not create any new loan demand. Most community banks don’t need money. Loan demand is flat and applications from credit-worthy borrowers are thin.  We considered it to be a stigma-stained TARP program.”

Small banks are telling the Obama administration that it isn’t they are lacking financing, but they are lacking strong small businesses that are worthy of receiving a bank loan.

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