President Barack Obama and Congressional Democrats are laying out plans for job creation packages using some of the $115 billion in TARP money big banks have repaid to the government, said the Wall Street Journal.

One part of the legislation would authorize approximately $110 billion in emergency spending to extend unemployment insurance, fund food stamp increases and subsidize private health insurance for the unemployed.

A second “jobs” bill would cost up to $70 billion and be funded by the bank bailout, said the Wall Street Journal. That plan would funnel more money to municipal projects like highway and bridge building and school construction and repair. Other money would be given as direct aid to state governments that have been forced to cut services and raise taxes to balance state budgets.

And some repaid bailout funds would be lent to small businesses directly from the Treasury, said the Wall Street Journal.

Republicans oppose using the returned TARP money for a jobs bill. Instead, they want to the money to be used to reduce the federal budget deficit.

The Obama administration announced recently it will expand its $50 billion housing aid plan to help more homeowners avoid foreclosure.
The changes, aimed at homeowners who do not qualify for other aid, will make it easier for them to sell their homes for less than the cost of the mortgage or transfer ownership to the lender.

The president’s Making Homes Affordable program, launched in March, reimburses mortgage companies that modify borrowers’ loans to help homeowners make the payments and keep their homes. To qualify for a modified loan, borrowers must provide proof of income and a letter stating why they need help.

Companies have made more than 55,000 offers to modify borrowers’ loans, according to the Associated Press.

Some mortgage brokers complain the loan modification plan is too complicated.

“Our experience at the ground level has been, so far, frustrating,” Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group, told the AP. Some mortgage company employees are either steering borrowers away from the plan or are unaware of it, he said.

Not all homeowners will qualify for loan modification. But Faith Schwartz, executive director of Hope Now, a mortgage industry group formed in response to the foreclosure crisis, told the AP, “This is a very well-thought out plan. People have to be a little bit patient.”

The recent revisions are meant to help borrowers who owe significantly more on their mortgages than they can afford to pay and so don’t qualify for the loan revision program.

In the first quarter of 2009, foreclosure filings topped 800,000, according to RealtyTrac, an online marketer of foreclosed properties.

With the recession in full bloom and few signs of the economy bounding back anytime soon, we have received a large volume of questions from small business owners inquiring about their ability to get a business loan. Typically, the question goes something like this.

“I’ve been business banking with (insert name of crumbling financial institution) since I started my business a while ago, but they declined me for a business loan. I’ve never had a late payment and, though my business is slower than last year, I’m still turning a profit. What can I do?”

When you’re searching for a business, it makes sense to start with your current business bank. After all, you’ve built a relationship with the people at the bank and they want to keep your deposits at their institution.  They should be your best shot, right?

In a sound economic environment, this may be true. But the current economic environment hasn’t affected all financial institutions to the same degree. There are national banks with solid footing and there are national banks receiving multiple rounds of capital infusion from the government. There are community banks in expansion mode and there are community banks that have failed… regional banks acquiring and regional banks getting acquired. You get the point. Getting declined for a loan from your financial institution, does not mean that you can’t get a business loan. Let me repeat – even if your business bank says no, there may be another financial institution that will approve you for a business loan.

Here’s a tip. Keep your eyes peeled for financial institutions advertising or sponsoring events in your community. If these institutions are spending money on marketing, it’s for a reason. They’re aggressively looking to expand their client base, and their balance sheet is healthy enough to allot expenditures for branding.

General Motors and the United Auto Workers last week hammered out a tentative contract deal that could pave the way for the automaker to meet the June 1 deadline to restructure its debt and avoid filing for bankruptcy.

Details of the plan won’t be released until the deal is ratified by union members.

GM has until June 1 to persuade bondholders to buy up $27 billion worth of company debt. Many bondholders are critical of the plan, which allows them to receive 225 shares of General Motors stock in exchange for each $1,000 worth of debt, said the New York Times.

The automaker needs 90 percent of shareholders to agree to those terms, which most analysts say is very unlikely.

“I’m convinced that they have no choice but to file bankruptcy. To the extent that you have constituencies with whom you’ve made an agreement prior to filing, it makes the outcome that much easier to achieve,” Scott Peltz, managing director at accounting and consulting firm RSM McGladrey in Chicago, told Reuters.

GM received $15.4 billion in government loans to stave off collapse until the company met restructuring guidelines set by the Obama administration. Under a new restructuring plan, the U.S. Treasury would control at least 50 of the automakers’ stock and a health care trust for union retirees would have a 39 percent stake, said the Times.

Members of Congress are at odds over the “cash for clunkers” bill, proposed legislation that would give consumers a government voucher toward buying a fuel-efficient vehicle for turning in an older, gas-guzzling automobile.

Sen. Dianne Feinstein, D.-Calif., who authored the bill, said a compromise bill hammered out by the House of Representatives and President Barack Obama does not go far enough.

“Essentially what it means is that perfectly good vehicles would be scrapped, so that vehicles with below average fuel economy could be purchased,” Feinstein said to the Associated Press.

The bill is intended to boost the struggling auto industry and help the environment by putting more fuel-efficient vehicles on the road.
Under the House compromise bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting less than 18 miles per gallon for one getting at least 22 miles per gallon, reported the Associated Press. The value of the voucher would increase to $4,500 if the mileage of the new car is 10 miles per gallon higher than the old vehicle.

Owners of small trucks and SUVs could get a $3,500 voucher if their new vehicle gets at least 2 miles per gallon more than the old truck or SUV. The voucher increases to $4,500 for a difference of at least 5 miles per gallon. For larger trucks, the new truck only has to exceed the fuel efficiency of the old vehicle by 1 mile per gallon to generate a $3,500 voucher.

Feinstein called the compromise “unacceptable.”
“American taxpayers have already pledged $33 billion in bailout funds to this flagging industry — without any special considerations for achieving greater fuel economy,” Feinstein said to the AP.

The U.S. trade deficit rose in March to $27.6 billion, as the global recession further weakened sales of American exports, according to a Commerce Department report.

The March trade deficit was 5.5 percent higher than February’s $26.1 billion trade gap, but lower than the $29 billion deficit economists had predicted, the Associated Press reported.

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Exports of U.S. goods and services fell 2.4 percent in March to $123.6 billion, the lowest level since August 2006. Sales of civilian aircraft, telecommunications equipment, semiconductors, and domestic autos and auto parts faced the steepest drops.

Imports, led by declines in industrial machinery, fell 1 percent to $151.2 billion, the lowest level since September 2004.

The U.S. trade deficit with China also rose 10 percent in March to $15.6 billion. Because of the large trade gap with China, U.S. lawmakers want to crackdown on unfair trade practices and weak manufacturing regulations in the country that have resulted in a flood of cheap goods into the U.S. and the loss of American manufacturing jobs.

But China has hardly been untouched by the global recession, reporting recently that its global export sales fell 22.6 percent from this time last year, said the AP.

The Obama administration plans to meet with Chinese leaders to discuss trade and other issues this summer in Washington.

Economists don’t expect a rebound in trade anytime soon, the AP reported, with the U.S. recession expected to last until the second half of this year and the economic slump in many other nations expected to drag into 2010.

Driven in part by more layoffs at Chrysler, jobless claims rose more than expected during the second week of May.

Initial claims for state unemployment insurance benefits increased 32,000 to a seasonally adjusted 637,000 the week ended May 9, according to Labor Department statistics.

Economists are hopeful, however, that jobless claims will drop after a stabilization in the auto industry.

The seasonally adjusted unemployment rate in the U.S. was 8.9 percent at the end of April, up from 8.5 percent the prior month and from 5 percent a year earlier, according to
Labor Department statistics.

In a report released May 14, the Labor Department said the producer price index climbed 0.3 percent in April, larger than the 0.1 percent analysts expected, due to higher food prices.

Prices of consumer food rose 1.5 percent in April, the biggest jump in food costs in more than a year. This uptick follows a decline of 0.7 percent in food prices in March.

The costs of eggs soared by 43.7 percent, the largest monthly gain in records going back 17 years, with beef, pork and vegetable prices also up sharply, said the Associated Press.

Energy prices were down 0.1 percent in April, following a 5.5-percent decline in March, said the report.

From year to year, the producer price index declined 3.7 percent, the biggest 12-month
drop since 1950.

Most economists believe inflation will remain in check, because businesses are wary to raise prices in the face of decreased demand for products.

Late last year, Biz2Credit launched a study to identify the challenges that are facing minority- and women-owned businesses. The survey does not ask for any personal or contact information, and all resulting reports and analyses will be offered free of charge to the Biz2Credit community.

Plus, after completing the survey businesses will be re-directed to a link with a code for a free listing in Biz2Credit’s marketplace. Market your services and products to a worldwide community of entrepreneurs for free!

Take the survey!

This article was submitted by Kathleen O’Connor, a contributing writer for Biz2Credit. Biz2Credit is a small business marketplace that provides entrepreneurs with the latest industry news and financial advice. Send all questions to info@biz2credit.com.

Earlier this month, MSNBC’s weekly segment “Your Business” featured www.biz2credit.com as the Web site of the week for their small business community.

Check it out!

http://yourbiz.msnbc.msn.com/archive/2008/12/08/1702107.aspx

This article was submitted by Kathleen O’Connor, a contributing writer for Biz2Credit. Biz2Credit is a small business marketplace that provides entrepreneurs with the latest industry news and financial advice. Send all questions to info@biz2credit.com.

The credit crunch has triggered an obscure congressional cap on some loans in the SBA’s flagship lending program, sharply reducing the number of those loans, the Wall Street Journal is reporting.

And those changes to the Small Business Administration loan program are hitting women and minority small-business owners particularly hard, according to the Dec. 9 piece.

WSJ reporter Raymund Flandez began with the story of Jacquelyn M. Payne of Powder Springs, Ga., who in August applied for a $5,000 Small Business Administration Community Express loan to buy technology equipment for her online directory company.

“But,” he wrote, “Ms. Payne quickly discovered that instead of the 250 loans a month her lender was providing earlier in the year, only 10 such loans were available in August — and she wasn’t getting one.”

The flow of loan dollars under the Community Express program has been further stymied by growth in the pool of people eligible for the loans, he wrote.

The program began as a way to boost minority-, women- and veteran-owned small businesses in low- and middle-income areas but now targets all small-business owners who are seeking less than $25,000, Flandez wrote, and owners needing more than that who are in business zones defined as “historically underutilized” or covered by the Community Reinvestment Act.

“It’s changed the program from a demographic-based program to a geographic-based program,” Eric Zarnikow, associate administrator at the SBA’s Office of Capital Access, told the Journal.

In fiscal 2008, the Community Express loan program accounted for about 1% of the total dollar amount that the SBA guaranteed and 9% of all SBA loans, up from only 1% in 2002, Flandez wrote. Seventy percent of the loans went to minorities, and 47% went to women.

“But when the Community Express program began in 1999, Congress specified that the total number of these loans couldn’t exceed 10% of all 7(a) loans,” he wrote. “So in early April, with more people seeking Community Express loans as credit dried up elsewhere, the SBA told lenders they would have to reduce the number of Community Express loans they approved each month.”

One California firm was instructed to make only 75 Community Express loans a month in May, and then, in July, it was told to cut that to 10 a month, down from its previous average of 175 loans a month.

“They’ve basically thrown the underserved to the back of the bus,” Tim Jochner, chairman of Superior Financial Group LLC, told the Journal, adding they had to turn away more than 500 small businesses this year. “They’re doing the opposite of what their mission is. It’s mind-boggling.”

This article was submitted by Kathleen O’Connor, a contributing writer for Biz2Credit. Biz2Credit is a small business marketplace that provides entrepreneurs with the latest industry news and financial advice. Send all questions to info@biz2credit.com.