On May 13, 2010, Congressman Barney Frank introduced the "Small Business Jobs and Credit Act of 2010" (H.R. 5297). This legislation aims to encourage small business lending through the establishment of a $30 billion "Small Business Lending Fund." The bill also offers tax incentives for small businesses. H.R. 5297 was signed into law by the President on September 23.
While H.R. 5297 is intended to help small businesses - a goal we can all support - in practice the legislation would create a second Troubled Asset Relief Program (TARP). Like TARP, this program does not lend money directly to small businesses. It would have the government take ownership interests in hundreds of banks and then require that they make loans. In fact, banks could replace original TARP money with funds received from this program.
This legislation forces taxpayers to subsidize banks - once again. In effect, we are taxing small business owners to pay banks to lend to small businesses. While the lack of credit for small businesses is a problem that needs to be addressed, we should try and solve this problem without another expensive and bureaucratic government program.
I believe that small businesses are vital to the economic prosperity of this country, and I will do all in my power to ensure the future viability of our State’s small businesses.