The Senate is discussing a small business jobs bill that may promote small banks to make more loans that small businesses have been asking for over the past months. The original proposal stated that the Treasury Department would provide $30 billion to banks in the hopes of encouraging more small business lending, which is vital to the recovery of the job market and combating high unemployment numbers.
Over the past months, the Small Business Administration was able to guarantee a higher percentage of small business loans and, as a result, many businesses were able to hire new workers, buy equipment, or simply afford to take on more clients or projects. Small businesses have been looked to for job creation in our nation, but many small business owners have been citing the fact that lenders simply are not making capital available.
When the SBA was able to guarantee a higher percentage of small business loans, it was reported that more businesses were getting the capital they needed to grow and expand. However, recently the funding for the SBA to guarantee this higher percentage was exhausted and, as a result, many small businesses say that banks have tightened their lending practices again.
However, many financial institutions have said that small business owners simply are not requesting money. Many banks who have been accused of not making small business loans have said that they’re simply not a high demand for small business loans as many companies are unsure about the economy, their financial future, and there are fears of a possible slip back into a recession.
The problem with small business lending is that there is no real certainty as to which side is correct. While there are some businesses who may be unable to afford a small business loan, there are many employers who have stated they would hire more workers if they access the capital. Yet, banks have been accused of simply waiting for business to get better before they lend, however, this lack of lending may be stopping the growth of small businesses.
The small business jobs bill that is currently being debated is hoped to give lenders the incentives they need to make these loans and, for businesses who are in fact looking for a small business loan, the funds to grow and expand their company and workforce will be available. While the jobs bill is still being debated and there are amendments that both sides would like to see, it’s hoped that assistance to small businesses will soon be available from this bill.