COLUMBIA – Small businesses may soon be in line for their own bailout.
Sen. Claire McCaskill said Tuesday that she thinks a federal direct loan program — which could make use of unused Troubled Asset Relief Program, or TARP, funds — could help small businesses in Missouri that have been having trouble securing credit.
TARP was created in October 2008 to provide federal bailout funds for ailing U.S. financial institutions. McCaskill suggested that leftover TARP funds could be used to bolster Missouri's small businesses that have stabilized from recent economic troubles and are ready to grow.
Earlier on Tuesday, the Obama administration extended the $700 billion financial bailout program until next October. Treasury Secretary Timothy Geithner said extending the program will help small businesses having trouble getting loans and homeowners struggling to avoid losing homes.
McCaskill said it is important to help small businesses grow because small business is where most of the new hires in Missouri will come from next year.
McCaskill was speaking with reporters at the conclusion of two video conference forums that she had conducted Tuesday with small businesses owners across Missouri.
Laura Myron, McCaskill's deputy press secretary, said in an e-mail that 33 small businesses participated in the forums, using five video conferencing facilities across the state, including one in Columbia.
McCaskill said the availability of credit was a common theme in all of her discussions.
The senator said small-business owners are also hindered by uncertainty about how potential health care and environmental legislation could affect them.
"That uncertainty is undermining the confidence that small businesses need to go forward," she said.
President Obama outlined a new jobs program Tuesday, and McCaskill said that she will apply what she learned Tuesday to discussions of a federal job package.
Geithner said the administration planned only limited use of the TARP over the next year. He expects $550 billion of the $700 billion will be spent. There was $364 billion committed in the 2009 budget year that ended on Sept. 30. Of that, Geithner estimated the government would not recover $42 billion.
The new commitments would be limited to three areas: support to avert mortgage foreclosures, boosting capital for small and community banks that are principal lenders to small businesses and a potential increase to a joint program with the Federal Reserve designed to bolster consumer and small-business lending.
The Associated Press contributed to this report.