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Obama Announces Help for Small Business

U.S. President Barack Obama has announced new help for small business owners who have been hard hit by the economic downturn. He is taking steps to ease the credit shortage that is prompting many small businesses to cut back operations or close their doors.

The president says small businesses are the heart of the U.S. economy.

"They are responsible for half of all private sector jobs," said Mr. Obama. "And they created roughly 70 percent of all new jobs in the past decade."

But across the country, small businesses are in trouble. Right now the biggest challenge many face is access to credit - the ability to get loans at affordable rates.

The government's Small Business Administration already provides some help by backing loans from community banks. The SBA recently expanded that program and cut lending fees. The president says as the next step, the Treasury Department will step in to buy small business loans from banks, giving them capital that can then be used for more loans.

"Any lender that provides SBA small business loans will have a buyer for those loans," he said. "And in turn, community banks will no longer have to choose between providing loans to credit-worthy small businesses and maintaining the required capital and liquidity."

The Obama administration has been especially attuned to criticism that it is not doing enough for small business, and focusing too much on helping big corporations and financial firms.

As the president was preparing to make his remarks at the White House, outrage was building over word a major American insurance company, AIG, was going ahead with millions of dollars in bonus payments to its executives. Those payments were being made as the floundering company received billions of dollars in government aid to avoid bankruptcy.

The president said the Treasury Department will do what it can to block the bonuses.

"In the last six months, AIG has received substantial sums from the U.S. Treasury," added Mr. Obama. "I have asked Secretary [Tim] Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole."

Meanwhile, Mr. Obama's political supporters are launching a grass-roots effort to win public support for his economic policies. Working from an e-mail list of millions of voters who supported his presidential campaign, they will focus on putting pressure on Congress to approve his $3.55 trillion budget for 2010.

Republicans say that budget shows the president is not really serious about helping small business. The number-two Republican in the House of Representatives, Eric Cantor of Virginia, said Sunday Mr. Obama's budget would raise income taxes on many small business owners and entrepreneurs.

"We have got to do something to help these small business people. We know that they are the job creators in this economy," he said. "And the problem with, I think we are seeing out of the Obama administration, is a lack of focus on how to get things going again."

Cantor spoke on the NBC news program Meet the Press.