The soon-to-pass stimulus bill has, as expected, created a litany of policy debates among supporters and detractors. And while many free-marketers have criticized the American Recovery and Reinvestment Act of 2009, one wonders if American businesses should seriously expect much benefit from it. CNN.com posted an article about the impact on small businesses today that is worth mentioning:
The bill authorizes the Small Business Administration to temporarily eliminate or reduce fees for participation in its flagship loan-guarantee programs, which insure banks against default by small business borrowers. The stimulus bill also increases to 90% the percentage of qualifying loans that the SBA can guarantee.
For companies in need of quick relief, the bill offers a "small business stabilization financing," which gives them money to pay off existing loans. Under the program, the SBA can issue or back loans of up to $35,000; businesses can then use the money to make up to six months of payments on previous loans. Interest on stabilization loans will be fully subsidized, and the loans won’t have any payments due for the first year. Borrowers must repay them within five years.
The SBA has a limited window of time and cash to fund these emergency measures. Congress allocated $630 million to fund loan subsidies and modifications, and authorized them to continue through September 2010. If the cash starts to run out, borrowers will have priority over lenders – and small banks will have priority over larger ones – for receiving fee discounts and waivers.
Other measures designed to help small business include (see the article for details):
- Unfreezing the loan market
- Loss accounting
- Equipment expensing
- Hiring incentives
- Capital gains tax breaks for those who invest in small businesses
Your thoughts? Will this actually help small businesses? Or is it just an example of bureaucracy being bureaucracy?