Washington - The Obama administration on Monday unveiled a plan to help unlock credit for the nation's small businesses, which have generated about 70 percent of net new jobs annually over the past decade.
"We are taking immediate action to help ensure that credit - the lifeblood of America's small businesses and its economy - gets flowing again to entrepreneurs and business owners," said US Treasury Secretary Timothy Geithner, who with President Barack Obama unveiled the plan at the White House.
The plan includes 730 million dollars from the president's 787-billion-dollar economic stimulus package passed by Congress in February, with reduced small-business lending fees and an increase on the guarantee for some Small Business Administration (SBA) loans to 90 percent.
Under the plan, the government will take aggressive steps to boost bank liquidity with more than 10 billion dollars aimed at unfreezing the secondary credit market, a key to making it easier for small businesses to borrow.
The nation's 21 largest banks that have received government bailout money must report monthly on how much lending they do to small businesses.
All other banks taking federal taxpayer help have to report quarterly on small business loans. Even banks that are not taking government funds are being required by the administration to make an extra effort to increase small business lending.
"As the flow of credit has dried up during this recession, small business owners who were prudent and responsible have been set back by the behaviour of others in our financial system who were not," Mr Geithner said.
He said businesses with strong credit histories have seen loan applications denied due to conditions that have nothing to do with their own actions and were now struggling to expand their businesses, make their payments or even keep workers on their payrolls.
"As a result, while the US Small Business Administration typically guarantees about 20 billion dollars in loans annually, new lending is trending below 10 billion dollars this year," the secretary said.
In brief comments with Mr Geithner before the official announcement, Mr Obama called small businesses "one of the biggest drivers of employment that we have."
Mr Obama said he had pressed his economic team to specifically help owners of small businesses and thaw credit, adding that the newest initiatives were only a first step.