WASHINGTON (Reuters) - President Barack Obama moved to boost U.S. job creation on Monday by making it easier for small business owners to borrow money and by spending up to $15 billion to ensure funds are available for loans.
Obama, facing criticism over his moves to bail out big banks and financial institutions on Wall Street, said help was on the way for small business owners who also are hurting in the deep U.S. recession.
“Small businesses are the heart of the American economy,” he said during an event attended by small business leaders at the White House. “They’re responsible for half of all private sector jobs and they created roughly 70 percent of all new jobs in the past decade.”
The programs announced on Monday build on $730 million for small businesses included in the $787 billion stimulus package approved by Congress last month to help the economy out of recession.
Some of the funds will be used to reduce fees on the Small Business Administration’s main loan program, and others will be used to expand the portion of the loans guaranteed by the federal government.
The Obama administration also announced new actions, including allowing small businesses to take a bigger tax break on their losses.
“Small businesses are the engine of America’s dynamism,” Treasury Secretary Timothy Geithner told the gathering. “You create and sustain most of the jobs in the country. ... When you prosper, the nation prospers.”
Obama unveiled a step to make sure financing was available for small businesses, injecting capital into the system by buying up to $15 billion in securities backed by small business loans.
The funds would come from the Troubled Asset Relief Program approved by Congress to help stabilize ailing financial institutions.
Geithner pressed U.S. banks to lend money to small businesses, citing the “extraordinary protections” the government had put in place to shield banks from risk.
He said the administration would require the largest 21 banks receiving government assistance to report monthly on their loans to small businesses. And he asked bank regulators to call for quarterly reporting on small-business loans.
“I want to deliver a clear message to our nation’s banks,” Geithner said. “Across this country, thousands of small businesses are finding it harder to get the credit necessary to stay in business.”
“We need every bank in the country to do everything in their power to provide the credit that small business needs to operate and to expand,” he said.
The announcement on small businesses followed a weekend of bad publicity for the government’s bailout effort for large firms.
Insurance giant AIG, which received up to $180 billion in taxpayer money to stay afloat, detailed hefty bonuses for senior employees and huge payments owed large banks, prompting a chorus of anger on Capitol Hill where doubts had already been growing about the bailout process.
Obama called the AIG bonuses an “outrage” and ordered officials to seek legal ways to block them.
He made clear that his administration sees aid to small business as crucial to driving recovery from the recession that started more than a year ago.
“Small businesses don’t just provide jobs, they provide the innovations that help us lead in the global economy,” Obama said, adding that small businesses filed for 13 times as many patents per employee as large businesses.
Editing by Chris Wilson