When Maria Elena Ibanez, chief executive of Miami company Intermark Foods, borrowed money for her business two years ago, she didn't have time to go through the paperwork necessary to take out a loan from the Small Business Administration.
But with President Barack Obama's announcement Monday of a federal aid package targeted at small businesses, Ibanez said she has renewed optimism about the ease of getting government loans. This most recent aid package is part of a push to get big banks to dole out their portion of the federal bailout money to small businesses, many of which are struggling.
Along with Treasury Secretary Timothy Geithner, Obama outlined his administration's plan for freeing credit to small businesses.
He noted that roughly 70 percent of new job creation in the last decade has been in the small-business sector. His plan includes dedicating up to $15 billion to free up secondary credit as well as dedicating $730 million to immediately reducing lending fees and increasing the guarantee on some SBA loans. In an unprecedented move, the plan requires the nation's 21 largest banks, which now receive government bailout funds, to report monthly on their small-businesses loans.
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While the SBA typically guarantees $20 billion in loans annually, new lending this year is on track to fall below $10 billion, according to agency officials.
Following the national trend, the number of SBA loans in South Florida has plunged in recent months. According to records from the South Florida district office of the SBA, 87 loans totaling $30,761,2333 were handed out in Miami-Dade County from Oct. 1 to Feb. 28.
During the same time period last year, 518 loans totaling $78,439,600 were granted.
In Broward, 58 loans totaling $17,420,600 had been doled out as of Feb. 28, compared to 243 loans totaling $38,532,100 last year.
Under the administration's initiative, $10 billion to $20 billion from the recent bailout package will be used to buy secondary SBA loans rejected by investors in an attempt to unfreeze the credit market.
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