Remarks by Karen Mills of the SBA | Summary and Q&A

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August 3, 2010
by
Federal Reserve
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Remarks by Karen Mills of the SBA

TL;DR

The Small Business Administration (SBA) and Federal Reserve have formed a partnership to help small businesses access capital and create jobs.

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Key Insights

  • 👨‍💼 Small businesses are crucial for economic growth and job creation.
  • 👨‍💼 Access to capital remains a major challenge for small businesses, with only 40% of credit needs being met.
  • 👨‍💼 The SBA and Federal Reserve partnership aims to improve access to capital for small businesses.
  • 👨‍💼 The SBA's Recovery Act loan program has been successful in providing $30 billion in loans to small businesses.
  • 👨‍💼 The Small Business Jobs Bill and Small Business Lending Fund are additional initiatives to support small business financing.
  • 👨‍💼 Better data collection is needed to understand small business financing and design effective programs.
  • ⚾ Partnerships with community-based organizations and CDFIs can help expand access to capital in underserved communities.

Transcript

Mills >> Well, thank you very much and thank you for the kind introduction. I have to say it is a great group here. We-- as I look around, I see all kinds of our partners and our friends and I particularly wanna thank Chairman Bernanke and the whole staff of the Fed for the partnership that we have built that you just heard described. About-- oh, I... Read More

Questions & Answers

Q: Why is access to capital a major challenge for small businesses?

Small businesses rely mainly on bank credit, and the credit crunch in 2008 caused many small businesses to struggle to secure loans. This lack of access to capital prevents small businesses from starting, sustaining, and growing their businesses.

Q: How does the SBA help small businesses with access to capital?

The SBA provides loan guarantees, sharing the risk with lenders and enabling them to make loans they wouldn't otherwise make. The Recovery Act loan program has been especially successful, providing $30 billion in loans to small businesses.

Q: Why is the SBA advocating for the Small Business Jobs Bill?

The Small Business Jobs Bill includes measures to address the gaps in small business financing. It aims to increase loan limits, provide access to working capital, and expand the use of SBA loans for commercial real estate. These measures would help small businesses access the capital they need to grow and create jobs.

Q: Are there any other initiatives to support small business financing?

The SBA is also supporting the Small Business Lending Fund, which provides community banks with capital to lend to small businesses with low interest rates. This, along with the SBA programs, is expected to ease the gaps in small business financing.

Summary & Key Takeaways

  • Small businesses are the engine of economic growth and job creation, making up half of the workforce and creating 64% of net jobs in the US.

  • The biggest challenge for small businesses is access to capital, with only 40% of their credit needs being met compared to 61% in previous years.

  • The SBA provides loan guarantees to small businesses to help them secure loans and grow their businesses. The partnership with the Federal Reserve aims to improve access to capital for small businesses.

  • The SBA has made significant progress with the Recovery Act loan, providing $30 billion in loans to small businesses, but they have run out of funding and are waiting for an extension.

  • The SBA is also advocating for the Small Business Jobs Bill, which includes measures to increase access to working capital, expand the use of SBA loans for commercial real estate, and raise the loan limits.

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