Tuesday, February 9, 2010

Obama Administration Should Expand Small Business Administration Lending to Spur Economic Recovery, Mercantile Capital Corp. CEO says


ALTAMONTE SPRINGS - The Obama Administration’s proposal to funnel $30 billion in TARP receipts to community banks to spur lending to small businesses could do more to help the economy if it focused on the U.S. Small Business Administration lending programs themselves, says Christopher G. Hurn, chief executive officer of Mercantile Capital Corporation in Altamonte Springs.

Hurn, whose company ranks as one of the leading providers of SBA 504 commercial loans to small business owners who want to acquire or develop their own facilities, said changes in SBA lending could go a long way toward growing the national economy.

“One of the things I’ve been saying for a few years is that the SBA 504 program should be used to refinance commercial real estate as well,” Hurn said. “You can’t do that with the program right now,” Hurn explained. “But as of Friday the 5th, the President seems to be on board with my proposal. We’ll see how quickly this solution can be put in place.”

Hurn gave the Obama administration high mark for its plan to eliminate capital gains tax on investments in small business.

“That’s phenomenal,” Hurn said. “We’ve finally seen a free market solution out of this President and this one actually would be good. That would be the kind of thing that will stimulate equity investments in the small business sector,” he said.

Hurn said many Obama administration proposals are problematic.

“The small business lending proposals are going to have mixed results,” Hurn explained. “Most community banks that have survived over the past 18 months have better capital ratios than large national banks, are relatively flush with capital and yet they’re lending less of their capital.

“Providing them up to five percent of their weighted assets to lend to small business customers at interest rates in the low fives to seven percent, doesn’t provide enough profit to cover the banks’ overhead. The only community banks that will be interested in this program are the ones that aren’t doing as well,” Hurn said. “Healthy community banks probably aren’t going to participate,” he said.

The $5,000 jobs credit is also troublesome, Hurn said. “If you’re a smart business person you’re not going to hire somebody for a position for something that you don’t have a demand for in your products and services just in order to get the job credit,” Hurn said.

The plan may benefit companies that are already expanding, but too few companies are expanding in this economy, he said.

“Expense reductions for equipment purchases also falls flat,” Hurn said.

“If you are a company that’s buying equipment, it helps you, but it doesn’t really get to the underlying problem affecting most small businesses in America that are struggling right now,” he said.
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For more information about this press release contact:

Chris Hurn, CEO, Mercantile Capital Corporation, 407-786-5040 or Geof Longstaff, Chairman, Mercantile Capital Corporation, 407-786-5040

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