President Obama and Treasury Secretary Geithner announced plans to help support small business owners on Monday at a press conference held at the White House. The administration has taken some criticism for laying out a budget which could increase taxes for some small business owners, and is now rolling out a plan that would help small business. 

The President’s plan would help to thaw the tightened credit markets for small business owners by temporarily guaranteeing up to 90% of the loans that are made through the SBA’s 7(a) loan program.  The plan would also authorize the Treasury Department to buy up to $15 billion securities backed by Small Business Administration loans.

“As a bank we have not been able to sell the guaranteed portions of the loans in the secondary market,” said Cynthia Blankenship, vice chairman of Bank of the West in Grapevine, Texas, and chairman of the Independent Community Bankers of America. “Consequently, we are now holding an inventory $11 million in loans that could be used as extensions of credit if we could sell those loans and have those dollars available.”

President Obama spoke of the trouble many small business owners have had opening and maintaining lines of credit during the liquidity crisis.

“Even though they’re maintaining profitable businesses, their credit lines are being pulled,” President Obama said of small business owners in brief remarks made at a meeting with small business owners on Monday.

“That obviously has huge consequences for employment, because small businesses are one of the biggest drivers of employment that we have, and so I’ve been on my team to figure out even as we’re working diligently to increase liquidity throughout the financial system how can we do some stuff that specifically targets the small business owner.” Obama said.

The President stressed that this was just the first step in what would be a continuing effort to make credit more easily available to small business owners.

Treasury Secretary Geithner emphasized the importance of small business, stating that small business owners would lead America out of the recession.

“The President understands the crucial role that small business plays in America, and that’s why we are moving with exceptional speed to put in place the largest program of investments and tax cuts since the Second World War to get Americans back to work and get our economy growing again,” Geithner said.

Geithner also criticized banks for tightening credit on small businesses in the faltering economy. “When banks individually pull back out of a sense of prudence and caution, the collective impact of those actions will make the economy weaker and make each individual bank worse off, because by pulling back on credit you push business to pull back and this dynamic can feed on itself,” Geithner said.

The plan will require the largest 21 banks in the country that are receiving government TARP funds to include small business loans in their reports and are asking bank regulators to include quarterly reporting on small business loans so that the administration can,“carefully monitor the degree of credit that is flowing to our nation’s enterprises and small business owners,” Geithner told small business owners.

Obama also highlighted his budget proposals to reduce capital gains taxes for investments in small and start-up businesses to zero, as well as providing tax credits to small businesses who offer health coverage to workers.

In a release following the administration’s announcement, Thomas Donohue, president and CEO for the U.S. Chamber of Commerce voiced his support for the President’s plan.

“Going forward, small businesses should have increased opportunities to receive bank funding since banks will now have reduced risks in making the loan,” Donohue said. “What the President has done today is to implement provisions of the stimulus bill and address some secondary market issues that should have positive benefits for lending."