Emily Maltby of The Wall Street Journal breaks down a White House proposal to increase the maximum size of SBA-guaranteed loans and offer capital to community banks using TARP funds. Some community bankers are skeptical, she notes. "Small-business loans from community banks tend to be risky and business owners often rely on personal and commercial real estate – the value of which remains down – as loan collateral." The plan would allow banks with less than $1 billion in assets to submit a lending plan that demonstrates how the TARP money will be directed to small businesses. Upon approval, these banks can access capital at a 3 percent interest rate, down from the 5 percent interest rate imposed on their larger counterparts.
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