There’s just one little wrinkle to Barack Obama’s $30 billion small-business loan program: Small businesses may not want loans, and small banks don’t want to lend.
The bill, which has passed the House and now only needs Obama’s signature to become a full-on law, would provide billions of dollars to local banks to help them loan more money to small businesses, and move the economy forward at least a little bit. Trouble is, according to some bankers, no small businesses need loans right now because they would prefer not to expand when unemployment is high and people are paying down debt — not exactly a recipe for screaming demand. Plus, banks aren’t exactly eager to be in the government’s back pocket and therefore subject to additional regulation and oversight.
There’s also a financial string: an annual dividend of up to 5 percent owed to the Treasury, depending on how much lending a bank does.
Ahead of midterm elections, the bill reads well in the headlines: $30 billion! Small business! Whether it does anything for the economy is another question.