President Barack Obama is set to release a plan Monday raising the federal guarantee on small-business loans up to 90%. The plan also will temporarily eliminate many of the loan fees that help pay for the program and cover potential defaults, and will instruct the government to purchase small-business loans bundled and sold on the secondary market.
Some indicate it will not be enough, but it will surely help. A 90% guarantee means that SBA lenders will only risk 10% of their money on a loan – which sounds like a pretty good deal to me. Here is the full text of an article explaining more details on the proposed program:
Small Business Loans Criticized
By Jonathan Weisman of The Wall Street Journal