Posted by: Nick Leiber on December 29, 2008
We talked about the Treasury’s Troubled Asset Relief Program (TARP) on this blog back in November. Now it’s time to mention another government-backed financial relief program, the Term Asset-Backed Securities Loan Facility (TALF). “Under TALF, the Federal Reserve will extend up to $200 billion in nonrecourse loans to holders of asset-backed securities (ABS) backed by consumer and small business loans in a bid to free up the ABS market,” as this story explains.
In a Dec. 24 press release, the Small Business Administration says it is “working with Treasury and the Federal Reserve Board of Governors to ensure the TALF would help restore the flow of buying activity in the disrupted secondary market for SBA-backed loans and generate the liquidity lenders need to step up lending to small businesses.” To do so, the SBA says it “extended TALF loan terms, broadened the lending base, and clarified security ratings for SBA guaranteed loans.”
“SBA is very supportive of the TALF program, which will ultimately help bring much needed capital to the nation’s small businesses,” said acting SBA chief Sandy Baruah in the statement. “With continued coordination between government and the lending industry, small businesses will be the driver of the economic recovery.”
A recent story on USBanker on the plan ends on a somewhat positive note: “TALF could turn on another spigot for small business owners, though the flow will be modest.”