We have seen some promising signs in recent weeks that our economy is on the path toward recovery, but I continue to hear from small business owners across Virginia about their difficulties in getting access to credit.
While Congress took unprecedented action last fall to help stabilize Wall Street, we can do more to support business owners on Main Street. These small businesses and independent retailers provide strength to our local economies and, if history is any guide, could create up to 70% of new jobs after the recession.
In repeated discussions with Virginia entrepreneurs and bankers, I have heard significant frustrations about the limited availability to credit and slow-moving government programs designed to help small businesses. Some retailers, for instance, say the credit crunch is impacting their ability to hire help for the upcoming holiday season.
This week, President Obama took a good first step by proposing increases in the size of the loans backed by the U.S. Small Business Administration. However, I believe we can and should do more to help responsible, creditworthy small and mid-size businesses access the credit they need – in many cases, simply to maintain payrolls and inventories.
For example, in recent days I have put forward a sensible proposal that would reallocate unused funds from the existing TARP program, combined with the resources of regional and community-based banks, to create up to a $50 billion small business loan fund.
This initiative would require the banks to put-up some of their own money and assume first-dollar risk so they have some “skin in the game.” It is important to recognize that most of these regional and community banks had nothing to do with the excesses that swept Wall Street and helped cause our economic crisis, and most of them have experience in evaluating and managing small business loans.
On Wednesday, I sent a letter to President Obama, signed by 32 of my Senate colleagues, urging the White House to consider this proposal as an additional step to help “unclog” the frozen credit lines that serve our small businesses.
My colleagues and I are recommending a targeted, short-term plan that will not require one additional taxpayer dollar — but it could help jump-start the economic recovery at the community level.
You can read more about this proposal, and read our letter to the President, here.
Let me be clear: we are not suggesting a bailout. Rather, we are recommending a responsible, short-term strategy that will re-boot the credit market serving our independent businesses and entrepreneurs so they can hold-on until we see a stronger economic recovery.
I believe the U.S. economy is beginning to turn the corner, and it is important that we do what we can, in a sensible way, to support our small business owners until we’re finally out of the woods. In the weeks ahead, I will continue working with Treasury officials and my colleagues in the Senate to strengthen our economy and create jobs.
As always, please feel free to contact me with your thoughts or comments.
Mark Warner represents Virginia in the United States Senate.
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