- The Washington Times - Monday, March 16, 2009

Amid misgivings over his spending blueprint, President Obama has decided to provide billions of dollars in federal lending aid aimed at struggling small-business owners.

The broad package of measures to be announced Monday includes portions of the $730 million from the stimulus plan that will be used to immediately reduce small-business lending fees and increase the government guarantee on some Small Business Administration (SBA) loans to 90 percent. The government also will take aggressive steps to boost bank liquidity with more than $10 billion aimed at unfreezing the secondary credit market, according to officials briefed on the plan who demanded anonymity to avoid pre-empting the president’s announcement.

In the coming weeks, the SBA is set to unveil additional initiatives as part of the stimulus plan to help a small-business community that is seen as critical to staving off job losses and promoting economic growth, officials said.

“It’s a huge step in the right direction,” Giovanni Coratolo, director of small business policy at the U.S. Chamber of Commerce, said Saturday. “In this economy, having the least amount of risk for banks will incentivize banks to lend to small businesses. A lot of small businesses will benefit from this.”

Mr. Obama is set to announce the new measures with Treasury Secretary Timothy F. Geithner at the White House.

They come as Republicans have sought to build on some bipartisan misgivings over Mr. Obama’s ambitious spending blueprint. In particular, Republicans say Mr. Obama’s budget proposal to raise taxes, starting in 2011, on individuals earning more than $200,000 and on households earning more than $250,000 will hurt small businesses, which face higher dividend taxes and limits on itemized deductions.

The administration’s proposals to improve worker access to health care and address climate change also could add higher health and energy costs to small businesses. The administration maintains that revenue from auctioning off carbon-emission allowances would offset much of the higher energy costs for many Americans.

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