Obama Moves to Thaw Small-Business Lending The Treasury Department will buy up to $15 billion in SBA loans in an effort to free up credit for small businesses. In making the announcement March 16, President Obama said, “We will immediately unfreeze the secondary market for SBA loans and increase the liquidity of community banks.” The dollar volume of SBA loans has fallen by about one-half this year, as the credit crunch led lenders to pull back. However, SBA loans make up only a tiny fraction of total small-business lending—as little as 4%, by some estimates. At the White House announcement, Treasury Secretary Timothy Geithner called on banks, especially those receiving federal aid, to put money in the hands of entrepreneurs. “We need every bank in the country to do everything in its power to provide small businesses the credit they need to expand,” he said. Geithner said the top 21 banks receiving federal bailout money will be required to report monthly on their small-business lending. All other banks will file quarterly reports. The Obama administration has also implemented provisions of the Recovery Act that are designed to aid small firms. Fees paid by lenders and borrowers on SBA’s 7(a) loans are temporarily eliminated. SBA will guarantee up to 90% of the amount of its 7(a) loans, reducing the risk for banks.