My recovery plan, as already been noted, raises the guarantees on SBA loans to 90 percent and eliminates costly fees for borrowers and lenders that can be too costly in a recession. And these changes are being implemented now, fulfilling a campaign promise that I made. The recovery plan also includes a series of tax cuts for small businesses and tax incentives to encourage investments in small businesses. And the Treasury Department has launched the Consumer and Business Lending Initiative to help unfreeze the credit markets.
I’ve also proposed, as part of my budget, that we reduce to zero the capital gains tax for investments in small or startup businesses — expanding and making permanent one of the tax cuts in the recovery plan. And my budget, as part of our health care reform efforts, calls for tax credits and other assistance to help small businesses offer coverage to their workers.
Therefore, as part of my Financial Stability Plan, the Treasury Department will begin purchasing up to $15 billion of SBA loans through the Troubled Asset Relief Program, or TARP. We will immediately unfreeze the secondary market for SBA loans and increase the liquidity of community banks. Cynthia’s bank is going to be able to sell those $11 million loans so that she’s got more money to lend. (Applause.)
So with this action, any lender that provides SBA small business loans will have a buyer for those loans. And in turn, community banks will no longer have to choose between providing loans to creditworthy small businesses and maintaining the required capital and liquidity.