Richmond business community optimistic about Obama plan

Richmond-area bankers and business owners were optimistic yesterday that a plan unveiled by President Barack Obama would spur credit markets.

"As far as I'm concerned, this is the first real benefit of substance" since the government began working to save the financial industry, said Thomas W. Winfree, president and CEO of Chesterfield County-based Village Bank and Trust Financial Corp.

Obama yesterday offered a fresh package of aid to small businesses -- "the heart of the American economy" -- in an aggressive push to get big banks that received federal bailout money to do more lending to these struggling entrepreneurs.

"You deserve a chance. America needs you to have that chance," Obama told small-business owners gathered in the White House East Room as the administration detailed various steps to get credit flowing to small businesses.

The measures include boosting bank liquidity with up to $15 billion aimed at unfreezing the secondary credit market; reducing lending fees; increasing loan guarantees; and easing the tax burden.

The administration also announced that the 21 largest banks receiving government money must report monthly on how much lending they do to small businesses.

The administration plan includes $730 million from the stimulus package to reduce small-business lending fees immediately and to increase the government guarantee on some Small Business Administration loans to 90 percent.

Winfree said the moves announced by the president would have a nearly immediate impact and the guarantee amount will encourage Village Bank to lend more money. The bank already works with the SBA but has cut back the number of loans.

While the SBA typically guarantees $20 billion in loans annually, new lending this year is on track to fall below $10 billion, according to the administration.

With Treasury Secretary Timothy Geithner by his side, Obama said the nation has small businesses to thank for many new jobs, roughly 70 percent in the past decade. Geithner said as small businesses prosper, the nation does, a critical element to any economic recovery.

The goal is to help those businesses make payroll, buy equipment, and maintain or even expand employment as the nation's economy is bleeding jobs.

Steve Barnett, owner of five Richmond-area Barnett's Hallmark stores and director of the career center at Longwood University's Retail University program, said he would wait until he saw results before getting too excited.

"It certainly is a good thing if [the money] gets down to the rest of us," he said.

Matthew Shay, president of Washington-based International Franchise Association, praised the president's moves.

"The announcement today of direct intervention in the small-business secondary-loan market is the missing piece of the small-business lending puzzle," he said.

Geithner also ordered the Internal Revenue Service to issue a series of new rules for temporary but significant tax breaks, meaning that small businesses:

The Associated Press and staff writer Louis Llovio contributed to this report.