Buy the book! Buy the book Eighteen Months and Short Stories, Real Life today! Editor's Note: I understand that this is a lot to read. Go slow and find out how to fund your business--no matter your residence. I am using Indiana because I live in Indiana. Introduced on day 43, President Barack Obama said Tuesday during and address to the U.S. Department of Transportation, the economy must be jumpstarted and mentioned the Consumer and Business Lending Initiative included in the economic stimulus package. It is for up to a trillion dollars to the American people and helps frozen credit markets. Individuals should check their state’s web site for specific information. Although it is a lot to read, not reading it will prevent you from understanding how to access the funds being given to states. I have picked out the most relevant points explaining the Consumer and Business Lending Initiative: Consumer & Business Lending Initiative – Up to $1 Trillion: Addressing our credit crisis on all fronts means going beyond simply dealing with banks. While the intricacies of secondary markets and securitization – the bundling together and selling of loans – may be complex, they account for almost half of the credit going to Main Street as well as Wall Street. When banks making loans for small businesses, commercial real estate or autos are able to bundle and sell those loans into a vibrant and liquid secondary market, it instantly recycles money back to financial institutions to make additional loans to other worthy borrowers. When those markets freeze up, the impact on lending for consumers and businesses – small and large – can be devastating. Unable to sell loans into secondary markets, lenders freeze up, leading those seeking credit like car loans to face exorbitant rates. Over the next several days, President Obama, the Treasury Department and the SBA will announce the launch of a Small Business and Community Bank Lending Initiative: This effort will seek to arrest the precipitous decline in SBA lending – down 57 percent last quarter from the same quarter a year earlier for the flagship 7(a) loans through: • Use of the Consumer &Business Lending Initiative to finance the purchase of AAA-rated SBA loans to unfreeze secondary markets for small business loans. • Increasing the Guarantee for SBA Loans to 90%: The Administration is seeking to pass in the American Recovery and Reinvestment Act an increase in the guarantee of SBA loans from as low as 75% to as high as 90%. • Reducing Fees for SBA 7(a) and 504 Lending and Provide Funds for Both Oversight and Speedier and Less Burdensome Processing of Loan Applications. Small Business and Community Lending Initiative: Few aspects of our current financial crisis have created more justifiable resentment than the specter of hard-working entrepreneurs and small business owners seeing their companies hurt and even bankrupt because of a squeeze on credit they played no role in creating. Currently, the increased capital constraints of banks, the inability to sell SBA loans on the secondary market and a weakening economy have combined to dramatically reduce SBA lending at the very time our economy cannot afford to deny credit to any entrepreneur with the potential to create jobs and expand markets. Further adding to this frustration is the sense that community banks – which still engage in relationship lending that serves their local communities -- have been overlooked not just during this crisis, but over the last several years. Over the next several days, President Obama, the Treasury Department and the SBA will announce the launch of a Small Business and Community Bank Lending Initiative: This effort will seek to arrest the precipitous decline in SBA lending – down 57 percent last quarter from the same quarter a year earlier for the flagship 7(a) loans through: • Use of the Consumer &Business Lending Initiative to finance the purchase of AAA-rated SBA loans to unfreeze secondary markets for small business loans. • Increasing the Guarantee for SBA Loans to 90%: The Administration is seeking to pass in the American Recovery and Reinvestment Act an increase in the guarantee of SBA loans from as low as 75% to as high as 90%. • Reducing Fees for SBA 7(a) and 504 Lending and Provide Funds for Both Oversight and Speedier and Less Burdensome Processing of Loan Applications. The President said that the country must put Americans back to work. He said the multi-faceted economic stimulus package impact is being felt because of tax cuts and such and transportation projects. The President said of the three and a half million jobs, 400,000 will be infrastructure projects including laying broadband lines. The President said 14 days after signing the bill into law shovels are hitting the ground and people are being put back to work. It is up to anyone interested to go to their state’s web site to find out how the stimulus package money is being spent where they live. In Indiana, there is a new web site dedicated to this along with a personal message from Gov. Mitchell E. Daniels, Jr. The message said: Thank you for visiting INvest.in.gov. The American Recovery and Reinvestment Act signed by the President will send unprecedented amounts of funding to states designed to stimulate the economy and to help those states with severe budget crises. Because we've been more careful about state spending, we've been able to balance our budget, repay all debts, and build strong reserves, so Indiana is in a different fiscal position than many other states. We still face difficult times, but we are holding our own and maintaining vital services that have been slashed severely in other states. My direction to our team has been simple: jobs, speed, prudence, and long-term value. We will use these dollars to put Hoosiers to work quickly. We will use them carefully, making sure to protect education and other services in the years after these one-time funds stop coming. And whenever possible, we will use them to create assets of lasting value: roads, bridges, buildings, but also better prepared teachers, more energy efficient homes, and so on. We must never forget that Washington does not have the money it is now beginning to distribute. The federal government will be borrowing it, and our children will inherit the bill. Our duty to use it wisely and efficiently is therefore a very solemn one. The web site itself went on to say: This website will be maintained to keep Hoosiers fully informed about uses of federal stimulus funds. You are invited to check it often. While there, I found via press release, the economic stimulus package has already been put to work: Unemployment Insurance Check amount increase
INDIANAPOLIS (February 19, 2009) - Governor Mitch Daniels announced today that eligible Hoosiers who are collecting unemployment insurance will receive a $25 increase in their weekly benefits. The $25 weekly increase is part of the just enacted federal stimulus legislation. The increased benefit could extend through the end of 2009. States that participate in the program with the U.S. Department of Labor will be reimbursed for its cost. For Indiana, that could be as much as $185 million. "We filed immediately so as not to lose a day getting more money to those who have lost jobs," said Daniels. "Indiana will be one of the first states in the nation to act on this opportunity." Eligible Hoosiers will start accruing the benefit increase when they file their weekly unemployment voucher beginning Sunday, February 22. Increased benefits will be paid with two $25 deposits for eligible recipients beginning Monday, March 2 and then $25 weekly thereafter. The increased benefit will apply to all eligible Hoosiers collecting state or federal unemployment benefits. The average weekly benefit for Hoosiers collecting unemployment insurance is $290; the maximum benefit is $390 per week.Also while there, I found the group that could help me access federal grant funding through the state for businesses: The Indiana Economic Development Corporation (IEDC) responds quickly to help businesses locate, grow and thrive in Indiana. The State of Indiana’s lead economic development agency, the IEDC oversees Indiana’s statewide business attraction and development efforts, coordinates state programs and incentives for companies looking to grow in Indiana, and provides technical assistance, business expertise and funding to Indiana entrepreneurs and high-tech start-ups. The IEDC is led by Indiana Secretary of Commerce and Chief Executive Officer E. Mitchell Roob, Jr. and governed by a 12-member board chaired by Governor Mitch Daniels. Northwest Contact List Director: Jim Staton - 219.644.3694 Project Manager: Cynthia Pruitt - 219.644.3697 Administrative Coordinator: Mollie Collins - 219.644.3696 There are billions of additional dollars available to Indiana through a competitive grant process provided by the American Recovery and Reinvestment Act of 2009. Examples include: Law Enforcement assistance, Health Information Technology, etc. The Governor has asked Secretary of Commerce and CEO of the Indiana Economic Development Corporation (IEDC) Mitch Roob to work with local communities, not for profits, colleges and universities both public and private, and state agencies to ensure that Indiana is competing for as many of these grants as possible and that the projects submitted are as strong as possible. Project Survey The state, in conjunction with Ball State University, has created a survey to gather information about potential infrastructure and other projects that may be eligible for stimulus funding. The survey is online and serves only as a tool to gather information. Any entity that wishes to have a project considered for funding or possible grant application should complete the online survey at the link below. Completion of this form does not mean that the project will or will not receive any stimulus funds. The survey is a central collection point for Indiana project information and is only a means of gathering information. You may not have answers to all questions, but please provide as much information as possible, including local match funding sources. A sample form is provided below to help you collect your project information. The deadline to submit is March 9, 2009. As you can see, there is an impending deadline. If this information is not presented to you via you local newspaper where you live, you should write a letter to the editor and ask why. Details on the Financial Stability Plan Between 2006 and 2008, there was a net $1.2 trillion decline in securitized lending (outside of the GSEs) in these markets. That is why a core component of the Financial Stability Plan is: A Bold Expansion Up to $1 Trillion: This joint initiative with the Federal Reserve builds off, broadens and expands the resources of the previously announced but not yet implemented Term Asset-Backed Securities Loan Facility (TALF). The Consumer & Business Lending Initiative will support the purchase of loans by providing the financing to private investors to help unfreeze and lower interest rates for auto, small business, credit card and other consumer and business credit. Previously, Treasury was to use $20 billion to leverage $200 billion of lending from the Federal Reserve. The Financial Stability Plan will dramatically increase the size by using $100 billion to leverage up to $1 trillion and kick start lending by focusing on new loans. • Protecting Taxpayer Resources by Limiting Purchases to Newly Packaged AAA Loans: Because these are the highest quality portion of any security — the first ones to be paid — we will be able to best protect against taxpayer losses and efficiently leverage taxpayer money to support a large flow of credit to these sectors. • Expand Reach – Including Commercial Real Estate: The Consumer & Business Lending Initiative will expand the initial reach of the Term Asset-Backed Securities Loan Facility to now include commercial mortgage-backed securities (CMBS). In addition, the Treasury will continue to consult with the Federal Reserve regarding possible further expansion of the TALF program to include other asset classes, such as non-Agency residential mortgage- backed securities (RMBS) and assets collateralized by corporate debt. 4. New Era of Transparency, Accountability, Monitoring and Conditions: A major and legitimate source of public frustration and even anger with the initial deployment of the first $350 billion of EESA funds was a lack of accountability or transparency as to whether assistance was being provided solely for the public interest and a stronger economy, rather than the private gain of shareholders, bondholders or executives. Going forward, the Financial Stability Plan will call for greater transparency, accountability and conditionality with tougher standards for firms receiving exceptional assistance. These will be the new standards going forward and are not retroactive. These stronger monitoring conditions were informed by recommendations made by formal oversight groups – the Congressional Oversight Panel, the Special Inspector General, and the Government Accountability Office — as well as Congressional committees charged with oversight of the banking system. a. Requiring Firms to Show How Assistance from Financial Stability Plan Will Expand Lending: The core of the new monitoring requirement is to require recipients of exceptional assistance or capital buffer assistance to show how every dollar of capital they receive is enabling them to preserve or generate new lending compared to what would have been possible without government capital assistance. • Intended Use of Government Funds: All recipients of assistance must submit a plan for how they intend to use that capital to preserve and strengthen their lending capacity. This plan will be submitted during the application process, and the Treasury Department will make these reports public upon completion of the capital investment in the firm. • The Impact on Lending Requirement: Firms must detail in monthly reports submitted to the Treasury Department their lending broken out by category, showing how many new loans they provided to businesses and consumers and how many asset-backed and mortgage-backed securities they purchased, accompanied by a description of the lending environment in the communities and markets they serve. This report will also include a comparison to their most rigorous estimate of what their lending would have been in the absence of government support. For public companies, similar reports will be filed on an 8K simultaneous with the filing of their 10-Q or 10-K reports. Additionally, the Treasury Department will – in collaboration with banking agencies – publish and regularly update key metrics showing the impact of the Financial Stability Plan on credit markets. These reports will be put on the Treasury FinancialStability.gov website so that they can be subject to scrutiny by outside and independent experts. • Taxpayers’ Right to Know: All information disclosed or reported to Treasury by recipients of capital assistance will be posted on FinancialStability.gov because taxpayers have the right to know whether these programs are succeeding in creating and preserving lending and financial stability. b. Committing Recipients to Mortgage Foreclosure Mitigation: All recipients of capital investments under the new initiatives will be required to participate in mortgage foreclosure mitigation programs consistent with guidelines Treasury will release on industry standard best practices. f. Posting Contracts and Investment Information on the Web: The Treasury Department will post all contracts under the Financial Stability Plan on FinancialStability.gov within five to 10 business days of their completion. Whenever Treasury makes a capital investment under these new initiatives, it will make public the value of the investment, the quantity and strike price of warrants received, the schedule of required payments to the government and when government is being paid back. The terms of pricing of these investments will be compared to terms and pricing of recent market transactions during the period the investment was made, if available. • Drive Down Overall Mortgage Rates: The Treasury Department and the Federal Reserve remain committed to expand as necessary the current effort by the Federal Reserve to help drive down mortgage rates – freeing up funds for working families – through continuation of its efforts to spend as much as $600 billion for purchasing of GSE mortgage-backed securities and GSE debt. • Commit $50 Billion to Prevent Avoidable Foreclosures of owner-occupied middle class homes by helping to reduce monthly payments in line with prudent underwriting and 6. Small Business and Community Lending Initiative: Few aspects of our current financial crisis have created more justifiable resentment than the specter of hard-working entrepreneurs and small business owners seeing their companies hurt and even bankrupt because of a squeeze on credit they played no role in creating. Currently, the increased capital constraints of banks, the inability to sell SBA loans on the secondary market and a weakening economy have combined to dramatically reduce SBA lending at the very time our economy cannot afford to deny credit to any entrepreneur with the potential to create jobs and expand markets. Further adding to this frustration is the sense that community banks – which still engage in relationship lending that serves their local communities -- have been overlooked not just during this crisis, but over the last several years.