Obama renews push for $30 billion small business plan

WASHINGTON (Reuters) - President Barack Obama is to renew a push on Tuesday to persuade the U.S. Congress to approve a $30 billion plan to spur lending to small businesses and trigger job creation.

President Obama tours the steelworks at V&M Star, a manufacturer of steel products in Youngstown, Ohio, May 18, 2010. REUTERS/Jason Reed

Obama, who has been criticized for not doing enough to generate job growth, proposed the plan back in February. The proposal has faced questions as to whether or not it would work.

During the worst recession in decades, many small businesses reported having trouble getting credit.

The legislation would establish a $30 billion fund to boost lending to small businesses looking to hire and expand their operations by providing additional capital to community banks.

The House of Representatives’ Financial Services Committee approved the Small Business Lending Fund Act by a vote of 42-23 last week. House Speaker Nancy Pelosi said at the time the legislation would be brought up for a vote soon in the full House.

Obama is to urge both the House and the Senate to act on the proposals as soon as possible during a 11:15 a.m. EDT White House event honoring Small Business Owners of the Year.

“This shouldn’t be a partisan issue. This shouldn’t be an issue of big government versus small government,” Obama will say, according to excerpts of his remarks released by the White House.

“This is an issue of putting our government on the side of the small business owners who create most of the jobs in this country,” he will say.

Job growth and government spending are major issues in November congressional elections in which Republicans hope to gain ground on large Democratic majorities in the House and the Senate.

Some Republicans have opposed the lending plan, arguing it was the wrong prescription for battered small businesses. They have said it would encourage more government involvement in private businesses along the lines of the $700 billion Wall Street bailout known as the Troubled Asset Relief Program (TARP).

The plan calls for the government to inject capital into independent banks. In return the banks would pay the government a dividend, but the dividend rate would decline as their lending to small businesses increased.

Editing by Eric Beech