Obama Administration Takes Steps To Aid Small Businesses
On October 21st, the Obama Administration announced plans to set forth a new set of initiatives to help spur lending to small businesses.
“I know that times are tough and I can only imagine what many of you are going through, in terms of keeping things going in the midst of a very tough economic climate, but I guarantee you this: This Administration is going to stand behind small businesses,” President Obama said. “You are our highest priority because we are confident that when you are succeeding, America succeeds.”
Under the new plan, banks with less than $1 billion in assets will be able to borrow money from the government at a 3% dividend tax rate. This is a reduction from the previous 5% that the Treasury currently offers borrowers under the Capital Purchase Program, a TARP (Troubled Asset Relief Program) initiative.
The Obama Administration is also taking steps at ending some of the TARP programs that were established at the height of the financial crisis in an effort to give a boost to the banking sector. The treasury is planning on spending a maximum of $30 Billion on a Federal Reserve Program to buy consumer loan-backed securities. The Government will also create a $250 billion program to increase the bank’s capital liquidity.
The move comes as the administration is searching for ways to help bolster other branches of the economy like small businesses and housing mainly due to the fact that they create between 60% to 80% of new jobs at a time when the unemployment rate is expected to top 10%.