Obama planning bailout for small businesses

It’s coming. He’s on his way to a Maryland small business now to make the announcement.

Within the next few hours, President Obama is expected to announce a major change in how the government’s $700 billion financial bailout is distributed. And he says that means shifting the bailout away from large financial institutions and into everyday businesses and community banks.

Obama’s own words were: “America will not recover until our small businesses recover.”

I’ll let you know when the announcement happens. But the White House has already gone public with much of the proposal.

“”Small Businesses have always formed the backbone of the American economy. These entrepreneurial pioneers embody the spirit of possibility, the tireless work ethic, and the simple hope for something better that lies at the heart of the American ideal,” said Obama in a statement. “The problem is, our small businesses have been some of the hardest hit by this recession. There’s no question that the steps we’ve taken have improved the overall climate for small businesses across the country, but there is more we need to do. And that’s why today, we’re announcing new steps to support more lending to America’s small businesses—steps that will lead to more jobs, more growth, and a stronger economic recovery.”

Here’s what the announcement will include, according to the White House release:

The President’s Announcement will include the following:

1. The Administration will take steps to improve access to credit for small businesses by supporting lending by small banks and Community Development Financial Institutions (CDFIs) through the Financial Stability Plan. This new initiative will support small business lending by providing lower-cost capital to small banks that present small business lending plans and to CDFIs that lend to small businesses in the hardest-hit rural and urban areas.

2. To get small businesses more access to the credit they need to grow and thrive, the Administration will seek legislation to increase the maximum size of three types of Small Business Administration loans. Increasing the maximum loan size of 7(a) loans from $2 million to $5 million will help small businesses invest in machinery, equipment, land, and buildings. Increasing the maximum loan size of 504 loans up to $5.5 million will help small businesses grow and expand their payrolls by supporting real estate purchases. And increasing the maximum loan size of SBA microloans from $35,000 to $50,000 will give a boost to start-ups and other smaller businesses.

3. The President will call on Treasury Secretary Geithner and SBA Administrator Karen Mills to convene a conference of regulators, Congressional leaders, and small-business owners to establish further steps the government can take to help small businesses access the credit that is so vital to their growth, and to economic prosperity in this country.

There’s some interesting reading on the topic online this morning. Bloomberg has a D.C. perspective on the plan. And here’s a story with enough context to catch you up if you’re just tuning in now.