MANATEE — As the economy worsens, Dieter’s Sod Services can’t help but think about how it will pull through with limited cash flow.
One option the Bradenton lawn service company isn’t ruling out is acquiring a loan.
“We are talking about loans, because of the cash flow and because last year our sales were only half of what they have been,” said owner Dieter Zoellner.
Lucky for him, President Barack Obama on Monday pledged to jumpstart the credit market for small businesses to make financing options more accessible to those in need.
To do that, Obama is calling for some temporary changes to be implemented to two programs under the Small Business Administration.
One, includes temporarily increasing loan guarantees to 90 percent for loans written under the 7(a) program, which allows small businesses to get loans up to $2 million.
The Obama administration says this move will give banks an incentive to lend.
The second change is to temporarily waive fees for lenders and borrowers on new 504 applications, a program that lends up to $4 million in economic development projects for small businesses.
“Those seem harmless,” said Bob Bartz, president of the Manatee County Chamber of Commerce.
However, Bartz added there is a misconception that banks are withholding loans all together.
“We’ve been talking with the small business community and banking community about the perception there’s no funding available,” Bartz said. “The underwriting used and the terms are just going to be different than they used to be.”
That includes stricter policies and requiring more money down.
Rep. Vern Buchanan, however, said Obama’s plans will change that and make it easier for small businesses to borrow.
In addition, Buchanan said freeing up credit will in the long-run help with job creation.
“Without credit, small businesses have been struggling,” Buchanan said. “Investing in small business will help people get back to work and get our economy moving again.”
However, Ken Alicea, owner of Jess Jewelers, said he would have preferred if Obama’s small business plan included financial relief for businesses that implement training and hiring.
“One of the things that wasn’t in the plan was a tax credit for training and hiring,” Alicea said.
“That would be of interest to us. That way if we wanted to try a few new things, we would hire or train some people and then we could get a tax credit.”