An Economic Stimulus package is an attempt by the government to boost economic growth and lead the economy out of a recession or economic slowdown. The two main ways for stimulating the economy are expansionary monetary policy and expansionary fiscal policy. Fiscal policy usually involves tax cuts or increased government spending, while a monetary policy involves lowering interest rates.
The American Recovery and Reinvestment Act of 2009 is a $787 billion economic stimulus package which was signed by President Obama on February 17, 2009. The Recovery Act had three immediate goals:
To attain these goals, the government has taken step such as:
The 2009 stimulus package signed by President Obama includes funding to help support a number of programs at the U.S. Small Business Administration (primarily reducing fees on 7(a) guaranteed loans). The high-level breakdown of the SBA funding is as follows:
In November 2009, the original funding began to run low, and so in December, another $125M was given to the SBA to continue the program through February.
At the end of February 2010, another $40M was added to the SBA stimulus program to last through the end of April 2010 for business loans. This was the third extension to the program which ups the guarantee on certain small business loans to 90% and reduces and/or eliminates loan fees for small business borrowers.
As of May 2010, the SBA ran out of stimulus-related funding for higher guarantees and lower fees on its two key loan programs (7(a) and 504 loan programs) for the fifth time.
SBA Administrator Karen Mills said, “The increased guarantee and reduced fees on SBA loans helped put almost $22 billion into the hands of small business owners and brought more than 1,100 lenders back to SBA loan programs. As a result, average weekly loan approvals by SBA have climbed by 87 percent compared to the weekly average before passage of the Recovery Act.”