Small business plan draws local praise

President Obama and Treasury Secretary Timothy Geithner announced plans yesterday to reinvigorate lending to small businesses with up to $15 billion in new government capital, increased government loan guarantees, and suspension of fees that add to borrowers' costs.

Obama and Geithner outlined the plan beforehand to a small group of lenders and entrepreneurs, including Philadelphia businessman Marco Lentini, founder of the small chain of Giá Pronto restaurants - a chain he hopes to expand this year.

Obama said the goal was to help companies such as Lentini's weather the credit crisis. Without intervention, Obama said, the Small Business Administration expected loan volumes to drop 50 percent, from $20 billion last year to $10 billion this year.

Obama said the plan would help small businesses continue their historical role as engines of innovation and economic growth. Over the last decade, he said, small businesses contributed two-thirds of the nation's new jobs.

Lentini praised Obama's plan - particularly eliminating fees that may boost a loan's cost 2 percent or 3 percent.

"What the president is doing now," Lentini said after the announcement, "will have a direct and immediate impact at the ground level, by leaving money with the businesses."

Six years ago, Lentini founded Giá Pronto, a "fast-casual" Italian restaurant featuring chopped salads and panini, on the campus of his alma mater, the University of Pennsylvania.

"Philadelphia had just been voted the fattest city in the country, and people told me I was crazy opening up a natural-, healthy-food company," Lentini said.

But he stuck to his entrepreneurial vision and has seen a good measure of success. Giá Pronto now has three locations - with one at the Hospital of the University of Pennsylvania and another at the Philadelphia Stock Exchange - and employs about 45 people.

Lentini wants to expand again. His goal this year is to open a Giá Pronto at Thomas Jefferson University Hospital and a completely new restaurant near his original location at 38th and Spruce Streets.

To expand, Lentini is seeking a $1 million loan backed by the Small Business Administration, which offers loans that are partly guaranteed by the federal government.

Lentini said he expected to obtain a loan even without the program Obama and Geithner announced yesterday, thanks to an ongoing relationship with his lender, Susquehanna Bank. But he said eliminating fees would save him $26,000 in costs - money he'll put back into his business and the economy.

"That's real money I can use to invest in training our employees, real money for working capital, real money for new expansions," said Lentini, who spent four years on Wall Street after getting a Wharton M.B.A. "And the people I employ are the ones out there shopping at malls, buying houses and cars. That's real stimulus."

In addition to suspending fees, Obama's plan calls for the SBA to increase loan guarantees and for Treasury to purchase up to $15 billion in SBA loans on the secondary market so that lenders can finance additional loans.

"This is definitely a step in the right direction," said Ethan Smith, a partner at Starfield & Smith, a Fort Washington law firm that specializes in SBA lending.

Smith said secondary-market purchasing of SBA loans had been moribund since October. "It's slowed to a trickle. If it's not completely frozen, it might as well be."

Smith said the increase in guarantees also should help. Previously, the SBA guaranteed 75 percent of loans above $150,000. Now, it can guarantee 90 percent.

Lynn Ozer, executive vice president of Susquehanna Bank, based in Lititz, Lancaster County, agreed.

"This will really encourage small lenders to make more loans."