Credit plan targets small businesses

— Senate Democrats plan this week to consider a $30 billion small-business lending program that Oregon Sen. Jeff Merkley says is a common-sense answer to the continuing credit crunch.

Many small businesses poised to expand are struggling to secure loans because community banks are facing tough capitalization requirements. The $30 billion fund would give them the reservoir they need to loan up to $300 billion, Merkley said.

“The challenge is credit,” Merkley said Wednesday at a Capitol press conference. “This is common sense.”

The loan program, which will be included in a larger bill on the floor later this week, has drawn criticism from Republicans who liken it to the 2008 Troubled Asset Relief Program.

“It looks a lot like another government slush fund,” said Sen. John Cornyn, R-Texas.

Maine Sen. Olympia Snowe, the ranking Republican on the Senate Small Business Committee, is opposed to the loan program because, she fears, it may encourage risky lending.

Merkley said that the program is structured to insure healthy community banks would make loans to small businesses with solid plans to expand and add jobs.

A separate vote on the loan fund will likely be taken so that Democrats can highlight Republican opposition to it during their mid-term campaigns.

The overall bill would provide $12 billion in tax cuts targeted at small businesses, strengthen existing Small Business Administration loan programs, as well as establish the $30 billion fund for community banks.