WASHINGTON, D.C.—President Obama announced Tuesday that $30 billion will be put into a Small Business Lending Program. The money would go to small- and medium-sized banks, which lend most to small and community businesses, according to a press release from the White House.

“Jobs will be our number one focus in 2010, and we’re going to start where most new jobs do—with small businesses,” said President Obama at a Nashua, N.H. town hall meeting. His comments were released in a statement to the White House.

The Small Business Lending Program will be created from Troubled Asset Relief Program (TARP) money paid back by the biggest banks and Wall Street financial firms. The fund will be separate from TARP to avoid the restrictions connected to TARP funds. It will provide lending capital to banks with assets less than $10 billion. The program includes incentives to encourage small banks to begin lending right away.

Reduced access to credit has made survival a struggle for small businesses since banks became stricter with lending.

“Financial self-reliance is back in vogue [for small business] as banks have all but shuttered their lending windows,” wrote Small Business Administration, Office of Advocacy economist Brian Headd in the December 2009 issue of the Small Business Advocate.

Luxury custom home builder Jim Gibson, founder of Gibson Builders in Washington, D.C., responded by email saying margins for them are tight but they haven’t had to lay anyone off or reduce pay. “Only bonuses have disappeared...the ‘small to middle business’ is always forgotten,” wrote Mr. Gibson.

According to Treasury Secretary Tim Geithner, as quoted in a White House release, in order for small businesses to boost the economy by growing and hiring, “they all stress the same thing—they need better access to credit.”

Of the 8,195 banks in the United States, nearly 8,000 are community banks, say the Independent Community Bankers of America.

Small banks account for over 50 percent of all small business loans nationwide, even though they make up only about 20 percent of all bank assets, said the statement announcing the Small Business Lending Program.

Following the president’s State of the Union Address, the Independent Community Bankers of America expressed appreciation to President Obama for recognizing “small businesses are the key to our nation’s economic recovery” and for seeking ways to “boost lending through community banks.”

The Independent Community Bankers of America and the U.S. Chamber of Commerce were unable to be reached by press deadline.

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