WASHINGTON – The United States Senate today passed the American Recovery and Reinvestment Act, which contains provisions aimed at freeing up capital for small businesses and making Small Business Administration loans more affordable and accessible.
“The Economic Recovery Plan passed today by the Senate is the first step toward loosening up capital for the nation’s small businesses,” said U.S. Senator Mary Landrieu, D-La., Chair of the Senate Committee on Small Business and Entrepreneurship. “The fees associated with the Small Business Administration’s flagship loan programs have served as barriers to growth when small firms are suffering the most. By reducing these fees, the Economic Recovery Plan could stimulate as much as $20 billion in new loans to America’s small businesses, creating or saving as many as 320,000 jobs.”
“The stimulus package that passed the Senate today contains the proper targeted measures to help small businesses effectuate our economic recovery,” said Sen. Snowe, Ranking Member of the Committee on Small Business and Entrepreneurship. “In particular, I am pleased that the Senate version includes multiple small business lending provisions that Chair Landrieu, Senator Kerry, and I fought for, including provisions to temporarily reduce or eliminate various lender and borrower fees, bolster funding for the SBA’s microloan program, and increase 7(a) and 504 loan sizes. The stimulus also contains surety bond provisions that I cosponsored, along with Senator Cardin and Chair Landrieu, to temporarily increase the SBA-backed surety amount from $2 million to $5 million for a two-year period. I am confident that our efforts will go far toward thawing the frozen credit markets so that our nation’s small businesses can receive critical financing that allows them to create new jobs.”
The Economic Recovery Plan includes $615 million to temporarily eliminate fees associated with 7(a) and 504 loans, which typically make up 40 percent of all long-term capital to small businesses. This year, the loan programs are down 57 percent and 43 percent, respectively. The Economic Recovery Plan provisions could stimulate as much as $20 billion in new loans.
The bill also includes funding for the SBA’s Microloan Program, which provides very small loans to qualifying small businesses. It includes $6 million for the program to handle the increase in demand from micro-businesses that have been crowded out of other financing sources as a result of the credit crisis. This funding will leverage an additional $51 million in microloans, creating or retaining an estimated 10,000 jobs.
The bill also provides $24 million for counseling to microborrowers.
To provide accountability, the package contains $10 million for the SBA Inspector General’s oversight of SBA stimulus funds and $15 million for increased lender oversight.
“Any effective recovery plan requires that American small businesses remain a top priority,” Sen. Landrieu said. “This package will serve as a good starting point to encourage small business growth and create new jobs. I look forward to working with Ranking Member Snowe and the other members of the committee to restore adequate funding to the SBA and make it a better partner to small businesses throughout the country.”