Obama unveils measures for small businesses at "heart" of economy
US President Barack Obama laid out a new effort Monday to help small businesses struck hard by a Wall Street crisis that has cut off their access to loans, dpa reported.
The administration's new plan is designed to jump-start lending by directly investing in frozen credit markets, boosting loan guarantees and forcing the 21 banks that have accepted emergency government funds to report monthly on their loans to US companies.
"Small businesses are at the heart of the American economy," Obama said at a White House event, noting that about half of all private sector jobs in the United States were in smaller companies.
The White House said it would spend up to 15 billion dollars to revive lending for small businesses, especially in a secondary securities market for business loans that has virtually come to a standstill since the US financial sector nearly collapsed in September.
Obama said the lack of lending to small businesses was part of a "vicious cycle that delays our recovery" from a deep recession, causing more job cuts and lessening demand.
The number of loans provided to small businesses plummeted 57 per cent in the fourth quarter of 2008 and administration officials said they expected worse at the start of this year. US firms have shed 4.4 million jobs since the recession began in December 2007.
Treasury Secretary Timothy Geithner said US banks - which have received hundreds of billions of dollars in emergency government loans to stave off bankruptcy - would have to go the "extra mile" to help revive lending to consumers and small businesses.
Many major Wall Street firms have been threatened with collapse since September because of risky investments made in the US housing market. Most banks and investors have cut lending to conserve cash and stay afloat.
"Given the role that many banks played in causing this crisis, you bear a special responsibility for helping America get out of it," Geithner said.