Small business is at the crux of the American economy. That is why the White House is looking for creative ways to help small business owners make it through these difficult financial times. President Obama and his administration have developed several different methods to try and provide assistance to small businesses that are struggling. While government officials don’t necessarily agree with all of these plans, the suggestions are evidence that someone has heard the outcry from small businesses that are struggling to stay afloat:
Government-Backed Loans. One of the most popular suggestions by the Obama administration is that the government should underwrite loans that could be used to fund small businesses. This would make more cash readily available to small business owners who need to cover the costs of overhead or make investments in their companies. This is a risky idea for both the government and taxpayers who would face repercussions if small business owners find themselves unable to repay the loans.
Extend Lines of Credit. Another suggestion is to allot part of the money that has been provided to the financial sector to extend lines of credit to small business owners. The government provided just over $700 billion to bail banks and other members of the financial sector out of an economic crisis. Because banks are the primary source of funding for small businesses that open lines of credit, there is a belief that some of these funds should be targeted right back into small business.
Stimulus Funding. Some stimulus dollars have already been invested in the area of small business. In conjunction with the Small Business Association, about $730 million has been committed to lending guarantees. This stimulus money is packaged into loans that small business owners can apply for at competitive interest rates, and deferred payments are also available. The funding is already being provided by the Small Business Administration, but it is a small dent in a much larger problem.
With each of these different suggestions and strategies by the Obama administration, the key is finding an effective solution that is also efficient and affordable. Taxpayers cannot be expected to assume responsibility for the financial problems of all small businesses across the nation. It will take a combination of strategies like these, as well as tactful financial planning, in order to promote recovery in the small business sector. There is not a magic solution to the complex problems created by the ongoing economic recession. The key is implementing a variety of creative strategies to combat the problem as a whole.
