NEW YORK (CNNMoney.com) -- President Obama has been talking -- a lot -- about what Washington needs to do to help save small businesses. Over the past week, he's introduced a half-dozen different initiatives aimed at unlocking credit, creating jobs and expanding the Small Business Administration's loan programs.
But most of Obama's proposals remain just that -- proposals. For them to go any further, Congress needs to get on board and pass legislation.
"If there are additional ideas from either party, I'm happy to consider them," Obama said Friday from Lanham, Md., where he traveled to visit a small mechanical services firm. "But what I hope -- what I strongly urge -- is that we work quickly and we work together to get this done. America's small businesses are counting on us."
Here's a rundown of where the president's proposals currently stand.
Jobs: Obama traveled to Baltimore last week to announce a $33 billion program of tax incentives to encourage hiring and wage growth.
The president proposed a $5,000 per-worker tax credit for new hires this year, and suggested reimbursing businesses for the Social Security taxes that they pay on inflation-adjusted increases in their payrolls in 2010. While companies of any size would be eligible for the credits, the cap on them would be $500,000 per company, a move aimed at steering the biggest benefit to small companies.
Business owners had mixed reactions to the proposal. Some say the credits would make hiring easier and help strengthen their companies, while others say the downtown has left their business so ravaged that they're in no position to bring on new workers.
The Senate plans to take up Obama's proposals next week. Expect lots of wrangling before any legislation moves forward. Republicans are concerned about the cost of tax credits, and even the president's own party has differences to hash out.
"We do not have a jobs bill," Senate Majority Leader Harry Reid, D-Nev., said on Tuesday. "We have a jobs agenda that we're working on."
Cheap funds for community lenders: At a town hall meeting on Tuesday in Nashua, N.H., the President proposed recycling $30 billion of the remaining Troubled Asset Relief Program (TARP) funds into a new government lending program offering ultra-cheap capital to community banks.
The new Small Business Lending Fund would be available for banks with assets of under $10 billion. Those banks collectively account for more than half of the nation's small business lending, according to White House estimates. Banks could draw on the fund with interest rates as cheap as 1%, if they show substantial increases in their small business lending this year compared to 2009.
That proposal also requires congressional action, and has already met with opposition. Sen. Judd Gregg, the senior Republican on the Senate Budget Committee, blasted the administration for trying to turn TARP into a "piggy bank."
Separately, Treasury Secretary Timothy Geithner on Wednesday announced final terms for a new program to make TARP capital available to community development financial institutions (CDFIs) at a 2% dividend rate, well below the standard 5% rate the Treasury usually charges. CDFIs are lenders that focus on economically underserved communities.
That program does not require any further approvals, and will soon take effect.
Expanding SBA lending: Small business loans are risky, especially in a recession. Default rates are up, and regulators are cracking down on banks when they make too many loans that turn bad. In response, banks have shied away from small business loans.
The SBA's programs reduce some of that risk by guaranteeing a portion of qualifying loans. If the business defaults, the government reimburses the bank for its loss. With other lending avenues drying up, the SBA programs are playing a bigger role in the small business credit landscape. Obama and other administration officials are pushing to relax some of the SBA's lending limits and make the loans more widely available.
On Thursday, Representatives Kathy Dahlkemper and Melissa Bean, both Democrats, introduced legislation to temporarily increase the maximum loan available through the SBA's "Express" program from $350,000 to $1 million. They also proposed raising the government-guaranteed portion of the loan from 50% to 75%.
President Obama took up that cause on Friday, asking Congress to increase SBA Express loan caps to $1 million. But -- in an illustration of just how contentious the details of these debates get -- Obama didn't back the Dahlkemper-Bean proposal to raise the loans' guarantee. In a call with reporters following Obama's speech, SBA Administrator Karen Mills said the administration's plan is for the 50% guarantee to remain as-is.
Congress will need to act next, but the trench warfare has already started. The House Small Business Committee chairwoman, Nydia Velázquez, blasted the plan soon after Obama touted it.
"SBA Express has acted as nothing more than a giveaway to big banks and expanding it will neither further economic recovery, nor create new jobs," Velázquez said in a written statement.
Obama has also asked on Congress to increase the caps on the SBA's flagship loan program, raising the per-loan maximum from $2 million to $5 million. The president first made that proposal in October, but Congress hasn't yet reached agreement on it.
Make government loans cheaper: The Recovery Act, passed nearly a year ago, raised the government guarantee on the SBA's two primary loan programs, 7(a) and 504 loans, to as much as 90%. The stimulus bill passed also temporarily eliminated the fees associated with government-backed loans.
The measures proved successful: SBA lending rebounded from last year's lows. But the money for the fee reductions ran out just before Thanksgiving. Congress granted the program another $125 million, which is keeping the program funded for now but will run out in the next month.
Obama has asked Congress to extend the subsidies through Sept. 30.
Real estate fix: The SBA's 504 loan guarantee program helps small businesses buy capital assets like equipment and real estate.
Most commercial real estate loans involve a big balloon payment some years into the loan, when the debt matures. Owners often refinance when those payments come due -- but right now, when many buildings have plunged in value, refinancing is a major challenge.
Currently, borrowers can't use SBA 504 loans to refinancing existing debt. Obama proposed temporarily expanding the program to allow it to back refinancing for businesses with commercial loans maturing in the next year who are current on all their debt payments.
The proposal wouldn't cost taxpayers anything. The SBA says it can be funded through fees for borrowers and lenders. But Congress will still need to approve any changes to how the 504 program works.
Other adjustments: A flurry of other Obama initiatives also target small businesses, including extending tax breaks for equipment purchases, increasing financing for exporters, and temporarily eliminating the capital gains taxes investors pay on qualifying small-business investments.
All of those proposals require congressional action. In his Saturday radio address, which focused on his small-business agenda, President Obama said he expects lawmakers to take up the debate next week.
"Leaders in both parties have supported similar ideas in the past. So let's come together and pass these measures without delay," he said. "Let's put more Americans back to work, and let's give our small business owners the support to do what they've always done: the freedom to pursue their dreams and build our country's future."
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.99%||4.02%|
|15 yr fixed||3.18%||3.16%|
|30 yr refi||4.01%||4.07%|
|15 yr refi||3.20%||3.19%|
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