Bailout Money for Small Business
By Jason Lewis
Sentinel Staff Writer
President Barack Obama is looking to boost lending to small businesses by using federal bailout funds to shore up smaller community banks and induce them to offer credit to firms he called the “backbone of the American economy.”
There is about $140 billion left from the bailout that congress approved a year ago. Large banks have received the bulk of the $700 billion allotted to the Troubled Asset Relief Program (TARP). Smaller financial institutions are in great need, so Obama is looking to give them relief and stimulate the economy at the same time.
But the question is whether this money is being spread fairly. Will Black communities get their fair share of money? At this point we will have to wait and see, but early indications show that it may not play out fairly.
Broadway Federal Bank received $9 million, which Chairman and Chief Executive Officer Paul Hudson was very relieved to receive, but $9 million is a very small amount when considering that there was $700 billion to go around.
Outside of Los Angeles, the state of Idaho received nearly four times as much money in federal stimulus contracts than the state of Louisiana, which is still recovering from the effects of two major hurricanes.
Idaho received $478 million in federal stimulus contracts resulting from the American Recovery and Reinvestment Act (ARRA).
By contrast, Louisiana has received only $116 million in federal stimulus contracts. A number of the larger contracts have gone to companies headquarter outside of the state.
Only four of the 30,383 jobs created by the stimulus contracts nationwide have gone to the residents of New Orleans, where there is great need, especially in the Black community.
President Obama wants to spur lending to small businesses.
“It is essential that we make more credit available to the smaller banks and community financial institutions that these businesses depend on,” Obama said. “These are the community banks who know their borrowers, who gave them their first loan, who have watched them grown from down the street, not from Wall Street.”
Obama is also asking Congress to increase the maximum size of Small Business Administration loans. Increasing the maximum loan size of micro loans from $35,000 to $50,000 would help start-up companies in particular.
Hopefully Obama will insure that the money is spread fairly, and that every community in the nation is taken care of.