WASHINGTON, D.C. – Senators Jeff Merkley (D-OR) and Barbara Boxer (D-CA) praised President Obama’s decision to create a $30 billion Small Business Lending Fund to assist community banks in extending credit to small businesses so they can expand and create jobs. Senators Merkley and Boxer introduced a similar proposal last October that would provide capital to community banks with requirements that they lend to small business owners and individuals.
“Small businesses drive our economy and right now they’re having trouble growing because they can’t gain access to credit,” said Merkley. “This plan will change that. By strengthening community banks – our key small business lenders – we’ll be able to spur lending, create jobs and revive struggling communities. I’m pleased to see President Obama make a strong commitment to our small business owners who want nothing more than to grow and hire more employees.”
“Small businesses generated 64 percent of the jobs created over the last 15 years, but many of our small businesses can’t get the loans they need to expand and create new jobs,” Senator Boxer said. “The best way to help our small businesses is to increase lending through community banks. I applaud President Obama for building on the legislation that Senator Merkley and I introduced to restart lending to small businesses.”
The Bank on Our Communities Act, introduced by Senators Merkley and Boxer, established a similar framework to the President’s proposal to assist community banks in extending credit to small businesses and individuals to spur job growth. The President’s proposal would use $30 billion in existing TARP funds to lend to small and medium-d banks on the condition that they devote the highest percentage of their lending to small businesses in their communities. The program would encourage broad participation by small banks because it would be separate from TARP and have different transparency and oversight provisions from their Wall Street counterparts.
Currently, small businesses employ one-half of the nation’s workforce. Less than one-third of them report that their credit needs are being met today. Fifty-nine percent of them now rely on credit cards to finance their daily operations, up from 44 percent at the end of 2008. Community banks hold less than $1 billion in assets and still made 48 percent of small business loans, despite the fact that they hold only 11 percent of national bank assets.