White House plans small-business lending boost-WEB ONLY

Seeking to counter a chorus of unhappy Republicans and nervous Wall
Street investors, President Barack Obama and his economic team are
taking a cheerier tone while making billions in federal loans available
to the nation’s struggling small businesses.

Obama and Treasury Secretary Timothy Geithner today plan to announce a
broad package that includes reduced small-business lending fees and an
increase on the guarantee to some Small Business Administration loans.
Yesterday, the president’s advisers said in television interviews that
they remained confident in the nation’s economic fundamentals, at times
adopting upbeat rhetoric the president once mocked.

“The fundamentals are sound in the sense that the American workers are
sound, we have a good capital stock, we have good technology,” said
Christina Romer, who heads the White House Council of Economic Advisers.

Obama, for his part, has embraced the role of “confidence-builder in
chief,” as one business leader asked him to become. One week after his
budget director declared “fundamentally, the economy is weak,” Obama’s
economic advisers offered up a buoyant assessment.

Larry Summers, the director of the National Economic Council and an
Obama adviser, quoted the president: “It’s never as good as people say
it is when they say it’s good and it’s never as bad as people say it is
when they say it’s bad.”
Dealing with a severe recession, Obama has turned to a public face that
emphasizes the potential for recovery instead of its limits.

To that end, the government plans to take aggressive steps to boost
bank liquidity with more than $10 billion aimed at unfreezing the
secondary credit market, according to officials briefed on the plan who
demanded anonymity to avoid pre-empting the president’s announcement.

“We know that small businesses are the engine of growth in the economy,
and we absolutely want to do things to help them,” Romer said yesterday
morning, speaking broadly on the outline of the plan. “There are
already a lot of things to help them in the recovery package, and some
of what will be coming out are the things that were in the recovery
package: increasing the SBA loan guarantees, lowering fees.”

The move comes as Republicans have sought to build on some bipartisan
misgivings over Obama’s ambitious spending blueprint. In particular,
Republicans say Obama’s budget proposal to raise taxes, starting in
2011, on individuals earning more than $200,000 and on households
earning more than $250,000 will hurt small businesses, which face
higher dividend taxes and limits on itemized deductions.

“We’ve got to do something to help these small-business people. We know
that they’re the job creators in this economy,” the House Republicans’
No. 2 official, Rep. Eric Cantor, said yesterday. “And the problem …
I think we’re seeing out of the Obama administration is a lack of focus
on how to get things going again.”

The new measures focus on opening up small-business lending, seen as
critical to cities’ growth. While the SBA typically guarantees $20
billion in loans annually, new lending this year is on track to fall
below $10 billion, according to the administration.

Under the two-month-old administration’s new initiative, the government
will step in to buy these loans to help unlock the frozen credit
market, using money from the recently passed bailout package in the
range of between $10 billion to $20 billion, one official briefed on
the plan said.

The other measures are part of Geithner’s financial stability plan
announced last month. They involve temporarily eliminating upfront fees
of up to 3.75 percent and some processing charges on certain SBA loans
that lenders typically pass along to borrowers. It also increases the
government guarantees on certain loans to 90 percent, up from 85
percent for loans below $150,000 and 75 percent for larger loans.