Obama Seeks $30B Small Business Boost

President Obama's bid to sell his economic agenda and re-energize voters picks up in politically significant New Hampshire, where he will again promote an idea to free up more cash for hurting smaller businesses.

Obama travels to Nashua on Tuesday to draw attention to a proposal he mentioned in his State of the Union address last week: funneling $30 billion to local banks so that they can help small businesses get needed financing.

The White House announced the proposal, dubbed the Small Business Lending Fund, officially in a statement released Tuesday morning.

According to the statement, only banks with total assets worth no more than $10 billion would be eligible for the funds.

CBS Radio News White House correspondent Mark Knoller reports an estimated 8,000 small and community banks would be eligible for the funds - institutions which the administration views as a pipeline to small businesses.

"These banks devote the highest percentage of their lending to small businesses in their communities, accounting for over 50 percent of all small business loans nationwide, even though they make up only about 20 percent of all bank assets," said the White House press release.

The fund would be set up on "terms that provide strong incentives to increase lending" to small businesses, according to the statement.

One of the key incentives would be a lower pay-back rate to the federal Government. As the small banks demonstrated a willingness to pass on the funds to business owners in their communities, "the dividend paid to Treasury on that capital investment would be reduced."

Knoller reports that banks would pay initial dividends for the loans of up to 5 percent - potentially reduced to as little as 1 percent if they increase lending to small business by 10 percent.

In New Hampshire, the president also will hold his second town hall in six days, a format that allows him to show engagement with the public and counter a sense of "remoteness," as he has put it, that people have had with his policy agenda.

The loan financing would come from dollars repaid by banks that got help from the vastly unpopular Wall Street bailout, giving the administration a fresh way to show it is reaching out to help community businesses, too.

The lending program is a refined version of a plan the administration first announced in October. Though the administration at the time did not affix a price to the proposal, it would have made banks with less than $1 billion in assets eligible for government financing at a low, 3 percent rate provided they used the money to lend to small businesses.

But the administration ran into resistance from bankers who believed they would be stigmatized by accepting money from the government's $700 billion Troubled Asset Relief Program. Treasury officials have been working since then to try to make the program palatable and to remove some of the requirements that applied to banks that received TARP money during the financial crisis.

The White House statement Tuesday morning said small banks which take advantage of the Small Business Lending Fund would not be subject to the same restrictions that larger banks bailed out under the TARP program were.

Obama's trip to New Hampshire comes two weeks after Democrats suffered the stunning loss of a Senate seat in neighboring Massachusetts.

The president is working to shore up his party's standing this year to avoid heavy losses in the House and the Senate, both of which are under Democratic control and getting more heat as millions of people look for work.

Fixing the economy is the nation's top worry and the centerpiece of Obama's efforts. The degree to which he is successful will play out in states like New Hampshire, where two House seats and a Senate seat are in play this November.

Obama lost the state's primary in 2008 to Hillary Rodham Clinton, now his secretary of state, but won New Hampshire comfortably in the general election over Republican Sen. John McCain of Arizona.

Obama ventured to New Hampshire in August - the town hall that time was in Portsmouth - to promote health care legislation at a time when tempers were hot in places around the country. He found a friendly audience that day, although the health care reform effort itself has recently become far less certain.