Small businesses could soon see an increase in loan availability after President Barack Obama recently announced plans to help small businesses by taking steps to help free up credit markets.

According to a March 16 Office of the Press Secretary release, the Treasury Department will begin making direct purchases of securities backed by Small Business Administration loans by the end of the month to help the flow of the credit market as part of the Consumer Business Lending Initiative. The release also stated that the administration plans to temporarily raise loan guarantees and reduce fees to help with lenders’ confidence.

Elizabeth Cottrell, manager at Shelly’s Restaurant, 901 Lucinda Ave., Suite H, said she has seen more credit limit restrictions for both the restaurant and her customers. Cottrell said she agrees that small businesses need financial assistance from banks.

“I do not believe [banks] need to lower their credit restrictions or anything like that, but banks are fearful of lending money, and they need to be more confident,” she said.

Although Cottrell said she is uncertain if the administration’s actions will help small businesses, she is hopeful.

Associate finance professor Diane Docking said the lack of loan availability can have an effect on a businesses’ ability to operate.

Small businesses depend on banks for short-term working capital loans and don’t have the advantage of larger firms in the availability of other sources of funding. When banks are afraid to loan, a spill-over effect causes small businesses the inability to operate because they need banks for funding and don’t have an alternative, Docking said.

“I think it has a real potential to save others,” she said. “These businesses who have been doing well for decades, they just need to buy some time.”

Docking said the banks, however, need to be careful who they lend to and not “throw good money after bad.”

Although Scott Morrow, owner of Flippin’ Eggs, 122 E. Lincoln Highway, said his businesses do not need help currently, but after he recently wasn’t able to refinance an investment property he already owned because he was self-employed, he doesn’t know how much the government’s actions will help because “banks are banks.”

“They are being tight because everyone else is being tight,” he said.

George Bahramis, manager of the Junction Eating Place, 816 W. Lincoln Highway, said his business is pretty free of any credit jams now and has good local and student support but said he thinks it’s a good thing if it helps business owners in need of money.

“I hope people start hearing better news soon,” he said.