Revitalize the Small Business Lending Company, ("SBLC") program of the Small Business Administration by funding it with $250 billion.
(*Apologies for the short diary, but perhaps some concepts when presented for discussion/criticism purposes are best left in concise outline form. Also, I am only trained as a molecular biologist and admit to some confusion and awe when daring to participate in macroeconomic discussions. Thanks for any comments!)
Fund the Small Business Administration (SBA) with an initial $250 billion for the purpose of facilitating the creation of private small business lenders.
I. Pursuant to an existing SBA program, qualified individuals and businesses with sufficient capital, can apply for status as Small Business Lending Companies (SBLC).
II. SBLC qualification allows an entity to write SBA backed/guaranteed loans.
III. In exchange for federal backing of such loans, SBA provides oversight and only consents to loans that meet financially sound criteria.
IV. Small businesses that have good credit and write good business plans (for the use of the loans) can then apply for these carefully regulated SBA backed loans.
V. As a result, Main Street businesses and individuals with capital, (in partnership with federally backed leverage), are able to reinvest such capital back into Main Street.
VI. This bottom up method would be preferable to a top down method of placing taxpayer money into over-sized, unwieldy and discredited (no pun intended) banks and financial services firms.
On a very general level, does this at least sound like a good alternative/supplement to aspects of the $700 billion economic salvage bill?