The Treasury Department announced a new credit plan on Tuesday intended to spur $20 billion in small business lending, especially to minority-owned businesses.

The new program is modeled after state initiatives known as capital access programs (CAP), in which borrowers, lenders and local economic development entities contribute a certain percentage to an investment fund that is used as collateral to support loans issued to borrowers, according to the Dow Jones Newswire.

CAPs have a strong record of lending to minority and women-owned business that may have had trouble getting credit or faced discriminatory lending practices.
Some critics worry that the new program might have some of the same problems that plagued the TARP plan. TARP funneled money to large and mid-size banks in order to boost small-business lending but it remains to be seen if that’s actually happened, said Dow Jones.
The Federal Reserve and FDIC have made a priority of bringing local business leaders and community banks together, an effort praised by the National Minority Business Council President and other groups.
“As a society, we must level the playing field and make capital more available to small enterprises,” Javier Palomarez, president of the U.S. Hispanic Chamber of Commerce.

Small businesses have been offered incentives to go green by investing in energy-efficient systems such as solar panels and wind turbines, but seeing some green in return often requires patience.

Last July, the Treasury Department began accepting applications for its 1603 program, which awards businesses with cash payments of up to 30% off the total cost of installing a range of renewable-energy equipment, according to the Wall Street Journal. The program has distributed more than $3 billion to 499 U.S. businesses, including companies that install renewable-energy equipment on behalf of clients, said the Journal.

The payoff for investing in pricey alternative-energy technology comes down the road in the form of cheaper utility bills and possibly selling excess energy or energy credits to other companies.

Power Sport Industries Inc., a ball-bearing wholesaler in Pennsylvania, recently installed a 123-kilowatt solar panel system and has seen its monthly utility bills drop from an average of $1,500 a month to $600 a month, said the WSJ. The system cost $850,000, but the company received over $500,000 in federal and state grants to help cover the cost.

While some small businesses may have trouble getting a loan to pay for such a big project, but Abel Zalcberg, founder of OFM Inc., a North Carolina furniture manufacturer, received a loan that covered 100% of the cost of installing a rooftop solar panel.

“The banks are very positive on this kind of project and they’re not positive on much these days,” Zalcberg told the WSJ.

Democrats, Republicans and the White House all have different ideas on how to spend $200 billion in leftover bailout money.

Senate Democrats want some $40 billion spent on small business loans, said Politico.com.

House Democrats, meanwhile, want to see the additional TARP money spent on various economic projects, such as job creation and homeowner loan programs, to hasten a recovery from the recession.

The Treasury Department wants to use the money to pay down the deficit and create an emergency reserve. Senate Republicans want the money returned to taxpayers.

Treasury Secretary Timothy Geithner told members of the Joint Economic Committee said the administration is eager to end the TARP program but said the country is still facing huge economic problems. “We are working to put TARP out of its misery, and no one will be happier than I am to see that program terminated,” Geithner said.

Alaska Sen. Mark Begich, one of more than two dozen Senate Democrats who support directing some TARP dollars toward loans for small businesses, said his constituents “saw the big banks walk away with these bailouts and then at the same time ended up with huge salaries,” while small businesses received virtually nothing.

President Barack Obama’s stimulus bill promises billions of dollars to get the economy back on track, but many small business owners are still struggling to understand how to get their share of the stimulus pie.

To encourage banks to fund small business loans, the Treasury Department plans to buy $15 billion worth of securitized SBA-backed loans using funds from the bank bailout program, Dawn Williams writes in the Nashville Examiner.

The SBA also created the American Recovery Capital loan program, which provides deferred-payment loans to small businesses unable to pay current debt. No-fee ARC loans are interest free. Click here to find out more.

Small businesses also can take advantage of a number of tax cuts and credits, Williams writes. Among other provisions, businesses that sell goods and services to the government, businesses that reduce debt and businesses that invest in new plants and equipment in 2009 are eligible for tax breaks.

Find out more at: http://usgovinfo.about.com/od/moneymatters/a/ecstimtaxes.htm.