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Small business gets stimulus breaks

Finally, $30 million has been allocated to expand the SBA's microloan program, which provides loans up to $35,000 along with technical assistance to small businesses.

Brogan sees the SBA elements of the package as helpful. The loan guarantee increase significantly reduces risk for banks making the loans, she says. And the microloans can benefit workers who are starting their own businesses after losing their jobs.

But others are skeptical. In normal economic times, "the SBA loan provisions that cut or eliminate fees would definitely have more power," Kerrigan says.

However, Kerrigan believes the fee provisions "will do very little to help lending conditions" because the weak nature of the economy has left banks afraid to make loans of any kind.

"The problem is that the economy is in horrible shape," she says.

George Cloutier, chief executive of the small business consulting firm American Management Services, leveled even harsher criticism at the SBA stimulus.

"This bill allocates a modest $730 million in a $787 billion package to a loser loan program," he says.

Cloutier doubts the new provisions will open the borrowing spigot for small business.

"Banks simply aren't going to lend to high-risk accounts without a 100 percent guarantee, a mountain of paperwork and very tight credit criteria, which small businesses simply can't meet," Cloutier says.

Instead of its SBA package, the government should simply make its own loans to small businesses, rather than merely guaranteeing portions of loans that private lenders make to small businesses, he argues.

"The obvious need for direct loans to small business is just lost in the twilight, mainly because administration officials and Congress haven't worked with small businesses," he says.

"If you leave it to the private sector, it just won't happen," due to the fragile nature of both the economy and the banks themselves, he says.

For her part, Brogan says her association believes that banks receiving financial assistance from the government should be required to direct 25 percent of that money to small business lending.

“Banks are being given a lot of money, and we aren’t seeing a commensurate increase in lending," Brogan says.

To learn about the SBA programs, contact the agency's district office closest to you. Offices are listed on the SBA's Web site. You can also call (800) 827-5722.

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