Democrats in the U.S. House of Representatives passed their second small business bill in as many days last week after pushing through a $30-billion loan fund aimed at helping community lenders get loans to entrepreneurs looking to start a corporation.
The loan fund was first proposed by President Barack Obama earlier this year. Massachusetts Representative Barney Frank has said that the bill could unlock up to $300 billion in loans.
To access the fund, community lenders would issue preferred stock to the Treasury Department, and pay back the money they take over the next ten years.
The government would also collect dividends from the stock, but those dividends would be reduced for banks which lent more to small businesses – giving them a financial incentive to channel the money to entrepreneurs.
According to the Associated Press, Republicans have argued that the incentive is too weak, and doesn’t do enough to guarantee the money will actually help small business owners.
The loan fund will be combined with other small business tax breaks which passed the House earlier in the week. The Senate should begin debate on the package soon.
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