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Heidi Kallet had to sign away her life, so to speak, to achieve the American Dream.

Despite the dismal economy, the Virginia small business owner was ready to open her second stationery store and hire some new staff. Although Heidi’s business was booming, credit for small businesses had dried up and she couldn't get a loan…until she gave the bank that agreed to help her everything she owned and signed her and her husband’s life insurance over as collateral.

This is not the only story of small business owners going to extreme lengths to get a loan. Many will take out second mortgages, run up their credit cards and employ various other risky measures because the loan environment is so bad. But two new federal programs formed under the 2010 Jobs and Credit Act might help them get the funding they need to launch new successful businesses and help rebuild our economy.

The U.S. Treasury announced on Aug. 17 that the Small Business Lending Fund set aside $418 million in funding for 37 community banks, and the day before 11 states and Washington D.C. were allocated what will eventually grow to $3.6 billion in state-level lending for small businesses through the State Small Business Credit Initiative. To date, 80 community banks have received more than $1 billion through the Small Business Lending Fund and more is yet to come. These new programs aren’t a cure-all for small businesses’ financial difficulties, but they will start putting money into small business coffers, helping them grow and create jobs.

These new programs, introduced by the Small Business Jobs and Credit Act of 2010, are designed to make sure small businesses have access to the resources they need for innovating and creating jobs. While they share this end goal, the two programs function differently. The State Small Business Credit Initiative injects federal capital in state programs as a way to spark private lending, while the Small Business Lending Fund provides community banks with low-cost capital if they are willing to go above and beyond 2009 small business-lending levels.

Since the financial collapse in 2008, entrepreneurs have struggled, and at times found it impossible, to get the loans necessary to expand and help grow our economy. Heidi Kallet isn’t the only small business owner out there who has gone to great lengths to secure a loan. Access to capital is a huge problem for small businesses across the country, and it affects virtually every sector of the economy. Last year, small business owners, advocates and others made it clear to lawmakers that America’s rich tradition of entrepreneurship and innovation was in jeopardy if something wasn’t done, and soon.

The credit initiative and lending fund were created as part of the Jobs and Credit Act, passed expressly for the purpose of getting money into small business owners’ hands now. Under the law, a total of $30 billion will be allocated over time through these programs.

In this tough economy, we need to foster an environment that helps those who want to pursue their dream of starting a business. A failure to do so stifles job growth and weakens our economic recovery. The programs outlined above won’t solve small businesses’ problems overnight, but they will help alleviate some of the challenges they face and free up capital so more entrepreneurs can seek and achieve the goal set by generations before us: living the American Dream.

John Arensmeyer is the founder and CEO of Small Business Majority

This post is part of the multi-organizational #HERvotes blog carnival.

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