WASHINGTON – The United States Senate Committee on Small Business and Entrepreneurship, led by Chair Mary L. Landrieu, D-La., today passed key small business access to capital and disaster recovery bills. The committee approved S. 511, the Expanding Access to Capital for Entrepreneurial Leaders (EXCEL) Act by voice vote; S. 289, the Commercial Real Estate and Economic Development (CREED) Act by voice vote; the Communicating Lender Economic Activity Records from the Small Business Administration (CLEAR SBA) Act by voice vote; and S. 415, the Small Business Disaster Reform Act by a vote of 11-6.
“When I talk to small business owners in Louisiana and across the country, one of the things I hear most is that access to capital is still a significant challenge,” Sen. Landrieu said. “It is only appropriate that our committee kicked off the 50th National Small Business Week by passing common-sense bills that will help small businesses grow and create jobs. I urge my colleagues to move forward on passing them through the full Congress as quickly as possible.”
The Excel Act would modify the Small Business Investment Company (SBIC) program to raise the amount of SBIC debt the SBA can guarantee from $3 billion to $4 billion. It would also increase from $225 million to $350 million the amount of SBA guaranteed debt a team of SBIC fund managers who operate several funds can borrow.
Under the SBIC program, the SBA licenses, regulates and helps provide funds for privately owned and operated private equity investment firms. SBICs are licensed and regulated by the SBA. SBICs use their own private money, plus money borrowed with an SBA guarantee to invest in small businesses. Typically, an SBIC will borrow $2 of SBA guaranteed funds for every $1 of private capital.
Since 1958, SBICs have invested $56 billion in more than 100,000 small businesses. SBIC’s have funded Apple, Fed-Ex, Callaway Golf, Jenny Craig, and Outback Steakhouse, when they were small businesses.
The CREED Act would extend a provision allowing small business owners to use SBA 504 loans to refinance certain existing commercial mortgages.
The provision, originally enacted as part of the Small Business Jobs Act of 2010, did not become fully operational until February 2012, significantly shortening the period of time that businesses could use 504 loans to refinance qualifying existing debt. It expired on September 27, 2012.
The 504 loan program is a long-term financing tool for economic development that provides small businesses with long-term, fixed-rate loans to help them acquire major fixed assets for expansion or modernization. Certified Development Companies (CDC) work with the SBA and private sector lenders to provide financing to small businesses under the 504 loan program. A CDC is typically a private, nonprofit corporation set up to contribute to the economic development of its community.
In Fiscal Year 2012, the program’s second and final year, the SBA approved more than 2,400 refinancings for over $2.2 billion to small businesses.
The CLEAR SBA Act requires the SBA to establish a searchable online database (“Lender Activity Index”) to provide small businesses and local, state, and federal policy makers with up to date, user-friendly data about SBA lending. This data will be available by zip code, as well as for each of the previous 3 fiscal years.
Earlier this year, Sen. Landrieu introduced S. 415 along with Sens. Thad Cochran, R-Miss., Kirsten Gillibrand, D-N.Y., Roger Wicker, R-Miss., Mark Pryor, D-Ark, Ben Cardin, D-Md., and Heidi Heitkamp, D-ND. This bill includes two no-cost disaster reforms that have enjoyed broad bipartisan support in the previous Congresses. The House companion, H.R. 1974, introduced last month by Rep. Patrick Murphy, D-Fla., currently has 11 cosponsors.
“As Chair of this committee, and as a senator from a state repeatedly hit hard from natural disasters, I believe that one of the most important responsibilities of this committee is to ensure SBA is fully staffed, better organized, and ready to quickly assist businesses post disaster,” Sen. Landrieu said. “After Hurricanes Katrina and Rita, the SBA response was slow and inefficient and insufficient to the task at hand. While there has been improvement at SBA, I continue to hear from small businesses that additional reforms are needed to make these programs more responsive to the needs of impacted businesses.”
“Our small businesses are the economic heartbeat of these communities, and they deserve to get the fastest and best help possible, particularly businesses that take the risk of being the first to open back up - before they even know if anybody else is coming back. That is why I am pleased that a bipartisan group of committee members voted to send this important set of reforms to the full Senate.”
First, S.415 modifies the SBA requirement that borrowers must use their personal home as collateral for business disaster loans less than $200,000. The bill requires SBA to review available business assets, such as commercial real estate, equipment, or inventory, before requiring a primary residence be used as collateral towards the loan.
Next, the bill also authorizes the SBA Administrator to allow out-of-state Small Business Development Centers (SBDCs) to provide assistance to small businesses located in Presidentially-declared disaster areas. This allows SBDCs to share resources across state lines or other boundaries following disasters, similar to how private sector utility companies share linemen.
In committee, three Democratic amendments were added from Sens. Landrieu and Jeanne Shaheen, D-NH. In particular, these amendments including the following provisions: 1)(Landrieu) requires the SBA to take steps to reduce paperwork burdens on individuals and businesses applying for SBA disaster assistance; 2) (Landrieu-Hagan) requires the SBA to report to Congress in 90 days on establishing an online web portal, within SBA’s existing disaster website, to track the status of their disaster loan applications; and 3) (Shaheen) requires the SBA to improve its oversight of the Economic Injury Disaster Loan program.
S. 415 has been endorsed by the following seventeen organizations: Association of Small Business Development Centers; International Economic Development Council; National Emergency Managers Association; National Small Business Association; U.S. Conference of Mayors; Partnership for New York City; Greater New Orleans Inc.; St. Tammany Economic Development Foundation; Southwest Louisiana Economic Development Alliance; Northeast Louisiana Economic Partnership; Jacksonville Chamber; Bay Area Houston Economic Partnership; Charleston Chamber of Commerce; Mississippi Gulf Coast Chamber; Mobile Area Chamber of Commerce; New Orleans Chamber of Commerce; Staten Island Chamber of Commerce.
In March, Sen. Landrieu held a roundtable entitled, “Helping Small Businesses Weather Economic Challenges and Natural Disasters: A Review of Legislative Proposals on Access to Capital and Disaster Recovery” to discuss the bills passed by the committee today.
Click here to watch a video of the roundtable.