WASHINGTON – United States Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu, D-La., and Ranking Member Olympia J. Snowe, R-Maine, wrote to Treasury Secretary Timothy Geithner this week, asking him to consider a program that would allow the federal government to use TARP funds to guarantee lines of credit for qualifying small businesses.
"Making capital available for small businesses is critical to the strength of our overall economy," Senators Landrieu and Snowe said in the letter. "This commonsense solution, which will not require Congressional approval, benefits all parties. It will provide banks an assurance that their loan will be paid, but, most critically, it will enable small businesses to obtain the capital they need to keep their doors open and employees on the job."
The letter from Sens. Landrieu and Snowe comes after they heard from distressed entrepreneurs at a Small Business Committee hearing earlier this month. At the hearing, entitled “Perspectives from Main Street on Small Business Lending,” entrepreneurs said they were seeing their lines of credit reduced or eliminated by banks despite their businesses’ perfect payment histories. One such entrepreneur was former dealer Bob Cockerham, whose trip to Washington was chronicled in F&I Management & Technology Executive Editor Gregory Arroyo's "Done Deal" blog.
"Small businesses have traditionally employed about half our nation’s workforce. In recent months they’ve borne the brunt of the fiscal crisis, making up 80 percent of the jobs lost since November," Senator Landrieu said. "Without our help, small firms won’t be able to fulfill their role as the engine of economic growth at a time when our economy needs them more than ever."
"This proposal was one that I announced during the Committee’s March 19 hearing on small business credit lines as one possible solution for helping to thaw frozen credit markets," said Senator Snowe. "I look forward to learning from the Department of the Treasury whether it believes this idea would be beneficial in assisting small businesses to retain credit."
The full text of the Landrieu/Snowe letter can be found here.