unveiled its 2010 budget, the Obama Administration is aiming its economic firepower at the smallto mid-sized business sector--and by extension the lower end of thecommercial real estate market. In the past few weeks, as it haspresented its budget to Congress and gone on a nationwide road show topitch its proposals, the small-sized business has been in the centerof these activities.

For the most part the proposals have been aimed at prying loose bankloans for SMB lending and creating jobs. For example, more than 200small banks would become eligible for low-cost funds through theTreasury Department's Troubled Asset Relief Program to boost lendingto small businesses. The proposal, which still has to be approved byCongress, would be structured so that community banks would be able toreturn the money to the government on favorable terms. Other proposalsrevolve around tax credits linked to the number of jobs created.

Real estate would only be a peripheral beneficiary of thoseinitiatives. However, the administration's plans to provide additionalsupport to the Small Business Administration would directly benefitthe space. The federal government, in its budget, is proposing toguarantee $3 billion in loans for the SBA's 504 program--a programthat helps fund SBA companies' purchases of property and/or equipmentby providing the borrowers with low rates that have been subsidized bythe government. For its part, the government guarantees 80% of the bank's portion ofthe loan.

The Obama Administration is also proposing to expand the agency's 504program to cover real estate refinancings. Such an expansion couldhelp refinance up to $18.7 billion a year in commercial real estatethat might otherwise face foreclosure and liquidation, the New YorkTimes reports.

For the most part, though, the bulk of the proposals are only going tobenefit commercial real estate indirectly, Howard Peskoe,transactional real estate attorney with Herrick, Feinstein LLP, tellsGlobeSt.com.

"When businesses start up or expand, they typically take on more space--whether it's leased or purchased, or retail, warehouse or office--and that is the benefit of the Obama plan to commercial realestate," Peskoe says. "I don't think the Administration envisions that thisinitiative will spur a flurry of community bank loans todevelopers, and neither do I. But withthe real estate industry, even several degrees of separation removed fromthe small businesses that receive the loans will provide an indirect benefit."

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