Banks are on their way back to recovery since many of the large ones have repaid their Troubled Asset Relief Program, or TARP, loans.
But small and midsize businesses were left out in the cold, Lynn Tilton, CEO of Patriarch Partners, said on Yahoo! Tech Ticker.
Now assistance needs to be given to the remainder of the economy, said Tilton.
Patriarch Partners is a private equity firm with $7 billion of assets and has investments in over 70 companies.
“We've left our small and midsize businesses behind; and we've left our American people behind. This does not an economy make,” she said.
Tilton said the government “should never have allowed TARP funds to go out without any mandate to lend.”
Firms such as Patriarch Partners will seek to do additional “high risk, high reward” lending with incentives from the government, Tilton said.
US Bancorp has promised to take another look at loans that were previously rejected, the Associated Press reports.
Meanwhile, Bank of America said it would allocate $5 billion more for small- and midsize businesses in 2010 compared to this year.
Richard Davis, chief executive of U.S. Bancorp, said the bank will set more “aggressive goals” for lending to small business, the Chicago Tribune reported.
“We have to find a way to qualify more people and not put ourselves at risk three or four years from now because of actions we took at a moment in time," he said.
Bert Ely, an independent banking analyst, said giving more loans to smaller businesses is not the only solution.
“This bank bashing is getting almost out of control. A lot of the small businesses that are crying for credit are, in many cases, not creditworthy” he said.
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