Archive for March 17th, 2009

Small Business Stimulus

Tuesday, March 17th, 2009

President Obama yesterday laid out his plan to free up credit for American small businesses. Under his plan, the Small Business Administration will increase its payback guarantee for small business loans from 85 percent to 90 percent. The proposal will also lower the loan fees paid by borrowers.

Smeal’s Anthony Warren, Farrell Clinical Professor of Entrepreneurship, made the following comments in response to the president’s plan:

It’s better to spend money on stimulus for the future than on supporting the dinosaurs of the past. Obama’s plan is a welcome sign that the new administration recognizes the importance of small company survival for the long-term health of our economy. 

Certainly the SBA has been neglected for too long. But changing the guaranteed level by 5 percent will not in itself provide sufficient stimulus to this vital sector. Many companies do not avail themselves of these guarantees currently because of the onerous paperwork and bureaucracy that is associated with the applications. There must of course be a balance between ease of loan acquisition and oversight, but  the loan application and approval process needs to be streamlined along with the higher guarantee levels.

Tags: Economic Crisis, Entrepreneurship, Warren
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