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Molly Brogan
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Washington, D.C. - With the Troubled Asset Relief Program (TARP) set to expire on Dec. 31, U.S. Department of Treasury Secretary Timothy Geithner recently sent a letter to several key members of Congress, informing them that the administration intended to extend the program until October 2010. A major focus of extending the program: getting credit in the hands of small business.
Although Geithner cited the administration’s intention to eventually shut-down the TARP program, he underscored the need to extend the program given the ongoing credit crisis many small businesses are facing. NSBA has been advocating for utilizing TARP funds to kick-start small-business lending since early 2009 and welcomes this announcement, however the time for talk is over—small businesses have been struggling for months and need prompt action.
“The entire U.S. economy benefits from a thriving small-business community that is able to create jobs,” stated Todd McCracken, NSBA president. “But without much-needed capital, that simply will not be possible.”
Specifically, the administration announced that it would limit new TARP commitments in 2010 to mitigating foreclosures and stabilizing the housing market; providing capital to small and community banks; and a possible increase to the Term Asset-Backed Securities Loan Facility (TALF), which is aimed at improving the securitization markets for consumer and small-business loans.
One of the largest stumbling blocks in the effective use of TARP funds to help small business has been concern from small and community banks that accepting these funds would expose them to executive-compensation restrictions and other future and unforeseen rule changes. Geithner stated that the administration was working on a new plan that would address those fears.
While the details of this plan have yet to be finalized, it also is expected to address the onerously high cost of TARP capital (from the perspective of many small and community banks) and its three-year duration as well as its restrictions on paying dividends.
NSBA supports the use of TARP funds to address the credit crunch crippling America’s small businesses, and looks forward to working with Treasury as it formulates its plan to do so.
Since 1937, NSBA has advocated on behalf of America’s entrepreneurs. A staunchly nonpartisan organization, NSBA reaches more than 150,000 small businesses nationwide and is proud to be the nation’s first small-business advocacy organization. For more information, please visit www.nsba.biz
