Relief, at Last

The Small Business Administration gave President Barack Obama some good news to report today, following a weak jobs report this morning from the Bureau of Labor Statistics.

Obama traveled to a small masonry block manufacturer in Bladensburg, Maryland, today to talk about jobs, and what his administration is doing to create more of them. The private sector added only 64,000 jobs in September, the BLS announced, but that was the ninth straight month of private-sector job growth, the president noted.

The Small Business Jobs Act, which was signed 11 days ago, should help accelerate that growth, he said. The bill beefs up SBA lending programs, creates a new $30 billion lending fund for community banks to tap in making small business loans, and provides a variety of targeted tax cuts for small businesses.

“It is small business that will power our growth and put our people back to work,” Obama said during his visit to Ernest Maier Inc.

Today the SBA announced it has permanently raised the maximum size limits for its loans—a provision in the bill that was not expected to be implemented for a month or two. This means small businesses can now get up to $5 million from the SBA’s flagship 7(a) loan program, instead of the previous cap of only $2 million. Up to $5.5 million is now available through the agency’s 504 program, which primarily finances real estate and equipment.

The SBA also temporarily increased the size limit on its SBA Express loans, which feature a streamlined approval process, from $350,000 to $1 million. These larger loans will help small businesses who need more working capital to restock inventories and support higher sales, according to the SBA.

“Across the country, there are small business owners who are in a position to take that next step to grow and create jobs, and these larger loan sizes provide another tool to help them do just that,” SBA Administrator Karen Mills said.

A week ago, the SBA implemented another provision of the bill: the renewal of a 90 percent guarantee on 7(a) loans through the end of the year, as well as reduced fees on both 7(a) and 504 loans. These provisions, which were first adopted as part of the economic stimulus bill, made SBA loans less risky for lenders and more affordable for borrowers. They sparked a rebound in SBA lending until they expired at the end of May.

In only a week since these loan enhancements were reinstated, the SBA has approved more than 2,000 loans totaling more than $1 billion, Obama said.

The Small Business Jobs Act will give small businesses the capital and the tax incentives they need to grow, the president said. Republicans, however, spent all summer blocking action on the bill.

“Just imagine the difference it could have made for small businesses and our economy if it had happened months before,” Obama said.

More needs to be done to spur additional growth, the president said. A tax credit for businesses that do research and development in the U.S. needs to be reinstated and made permanent. Infrastructure spending needs to be accelerated, an issue Obama plans to talk about Monday with some of the nation’s mayors.

Some small business groups, however, think the Obama administration and Congress are doing more to hurt the economy than help it.

Raymond Keating, chief economist for the Small Business & Entrepreneurship Council, said “grossly misguided public policy” is the reason why businesses aren’t hiring more workers.

“Taxes have been increased, with more hikes threatened,” Keating said. “The current White House and congressional leaders are hyper-regulators. Government spending has reached unprecedented levels. Nothing is happening in terms of advancing free trade. And the Federal Reserve is now talking up the idea of raising, rather than fighting, inflation. That’s a frightening policy scenario. Why would anyone expect entrepreneurs to create jobs when government is attacking business and the economy on all fronts?”

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Kent Hoover is the Washington bureau chief for bizjournals.