Obama's Plan for Small Businesses

About a month ago, President Obama announced a $15 billion plan to help small businesses secure the loans that many have needed to keep their companies up and running. The plan was met with mixed reviews- some people felt the plan would be put into action quickly and enable companies who had previously been held at an operational stand still to pick up where they left off, while others felt the plan was a positive gesture, but that small businesses would not necessarily benefit as much as the administration proposed.

In the months leading up to the announcement by President Obama, many small businesses have been having trouble securing loans from banks in this economic downturn. Even those with stellar credit have been unable to get the cash needed to stay afloat. We experienced this first hand, after trying to apply for a loan late last year, only to find that even though we have a very good credit history, we would only be able to receive funds if we put my parents' house up as additional collateral. This was really the only option we were given, so in the end, we decided to hold off and self-finance for as long as we could.

Among the benefits outlined in this new plan to help small businesses:
(from "Obama vows to help small businesses," March 16, 2009, CNN.com)

• Currently, the government guarantees up to 85 percent of SBA loans below $150,000, and up to 75 percent of larger loans. Under the administration's plan, the government temporarily will increase the loan guarantee to 90 percent as an incentive to banks to lend.
• The second SBA program, the "504 program," guarantees up to $4 million worth of economic development projects for small businesses. The administration temporarily will eliminate fees for lenders and borrowers on any new 504 applications.
• The administration also temporarily will eliminate the upfront fees for 7(a) loans that banks charge borrowers. These fees go up to 3.75 percent for larger loans.

We have yet to revisit the idea of securing additional funds through a bank loan, but I do wonder, if we were to approach our bank now, if perhaps there might be more opportunities for us to obtain funding.

Any of you entrepreneurs out there have a recent credit or loan experience (good or bad)? We'd welcome any thoughts or comments you might have on whether you feel the program put in place by the Obama administration is really working.