WASHINGTON – United States Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu, D-La., and Ranking Member Olympia J. Snowe, R-Maine, today called for more help for small firms after dim reports from the Federal Reserve’s most recent Senior Loan Officer Opinion Survey were released yesterday. According to the survey, about 70 percent of domestic banks have tightened small business lending. That’s down only 5 percent from the worst reports last year, despite having spent $350 billion to jumpstart the economy.
Entrepreneurs locked out of the traditional lending market because of the credit crisis often rely on the Small Business Administration’s (SBA) 7(a) and 504 loan programs – the largest sources of long-term financing for America's small businesses. Yet these programs continue to suffer under a worsening economy. Lending through the SBA’s flagship 7(a) program and the 504 economic development program is down 57 percent and 45 percent, respectively, compared to the same period last year.
“This bleak news underscores the need to help entrepreneurs struggling to survive in this gloomy economy,” Sen. Landrieu said. “Without loans, many small businesses don’t have the money they need to stock their shelves and pay their employees, causing more unemployment. As Chair of the Small Business Committee, I will work with Ranking Member Snowe and the other members of the Committee to ensure that entrepreneurs will no longer be neglected. Small business assistance, through greater access to credit and tax incentives to create jobs, must be a central part of the Senate’s economic recovery plan to be released in the coming days.”
“Yesterday’s latest Federal Reserve report confirms the dismal state of our economy, with banks tightening their lending practices at a troubling rate,” said Senator Snowe. “It is critical that the stimulus legislation the Senate is presently considering include significant assistance to augment small business lending, such as provisions that temporarily reduce or eliminate Small Business Administration (SBA) lending fees, bolster funding for the SBA’s microloan program, and increase 7(a) and 504 loan sizes.”