Obama Small Business Loans - Details of the Rescue Plan For Small Businesses

The fury over the $300 billion of TARP money going to large banks is still some simmering in the minds of most Americans. To say this monumental giveaway program was unpopular is a euphemism. Needless to say, big banks have achieved well deserved disrespect as a result. But what about small community banks? Many of them did not receive a dime of TARP monies and are more likely to loan capital to small businesses. With this in mind, Obama recently unveiled his new Rescue Plan for small businesses at a town meeting in New Hampshire. Let us examine some of those details and see if it will deliver needed loan monies to our struggling 28 million small businesses.

First the facts. $30 billion is to be made available to small community banks, funded with the money recently received in payback from large banks who received TARP money. In other words, money from big banks recycled to small banks. Although it certainly seemed so, the government was not just giving away money under TARP. It invested capital into the big banks who pay it back. And, since many banks had it crammed down their throats, they have been all too eager to repay and free themselves of the Federal regulations--baggage that came along with it.

Bottom line. Can small businesses look forward to receiving loans now from these community banks, which haven't been very willing to do so in the past? Without sounding like a politician, the answer is "yes" and "no". I have good news and bad news. The bad news is it will take some time for such an initiative to be enacted and the money to start flowing. The good news: there are some banks right now who are lending, even without this program.

We should be aware of an existing SBA loan program that is working quite well without this new initiative. Believe it or not, there is a loan program out there and SBA lenders are actually making loans currently: the Community Express Loan Program. This gives unsecured small business loan between $5,000 and $50,000 with very little paperwork, answers typically in two days, interest rates presently at 7.75%, funding and two weeks, and monies wired directly to your business account. There are lenders participating in this program right now.

If you are a small business owner I would not hold my breath while this money starts flowing from the Federal government pipeline. In the meantime, make your application to community express lenders who are loaning currently.