WASHINGTON – Today, Senator John Kerry (D-Mass.) hosted a roundtable discussion on legislation he introduced this week to expand and improve the government's top lending programs for entrepreneurs. With access to capital regularly cited as a top concern among small business owners in Massachusetts and around the country, Kerry convened the roundtable to hear directly from small business owners, advocates, lenders and the Bush Administration.

"Just last year, small business loans helped create and retain about 22,000 jobs in Massachusetts," said Kerry. "It is those kinds of results, helping entrepreneurs and creating jobs, that show these programs are working for Bay State businesses. My bill will increase opportunities for our entrepreneurs to succeed and expand the reach of these programs to underserved communities, including minorities and women, so they will have a fair shot at getting the capital they need to achieve the American dream."

In 2006, more than 2,800 Massachusetts small businesses received $365 million in 7(a) and 504 loans, creating or retaining an estimated 21,800 jobs in the state. While these programs are effective and contribute to the economy, there is a need to improve them and reach more minorities and veterans, filling a gap left by the private sector. In Massachusetts, the percent of 7(a) loans to African Americans and women has remained stagnant while the percent of loans to veterans has decreased since 2001. The percent of 504 loans to women and veterans in Massachusetts has decreased since 2001.

The Small Business Lending Reauthorization and Improvements Act (S. 1256), cosponsored by Senators Olympia Snowe (R-Maine) and Carl Levin (D-Mich.), expands the Small Business Administration's (SBA) 7(a) and 504 loan and microloan programs which provide long-term financing that small firms could not receive through normal channels.

Western Massachusetts Enterprise Fund, Inc.'s, Executive Director Chris Sikes participated in the roundtable and spoke about the importance of the SBA's microloan and microloan technical assistance programs to Massachusetts firms.

"The microloan program has been the core of our microenterprise development program since its inception because it is the only program which marries technical assistance with lending. By linking technical assistance with the loan, a long-term partnership is established which helps move an enterprise from the start-up, early phase to a more stable, mature position," said Sikes, from Greenfield, Mass.

Newton, Mass., small business owner Joan Wasser Gish advocated for Kerry's proposal to create a pilot program to extend small business loans to non-profit child care providers.

"Early education and care supports the overall economy and non-profit providers play a very important role in low-income communities, educating children and supporting working parents and the businesses they work for. Senator Kerry's proposal could have a significant positive impact on parents, businesses and communities across Massachusetts," said Wasser Gish, who runs Policy Progress.

Specifically, the Small Business Lending Reauthorization and Improvements Act:
  • Authorizes the government to back nearly $100 billion in loans over the next three years, providing enough levels to avoid shut-downs or delays in funding, including up to:
    $60 billion in the 7(a) program
    $27 billion in the 504 program
    $330 million in microloans

  • Creates an Office of Minority Small Business Development to provide leadership at the SBA to make sure the agency’s programs and services are reaching more minority entrepreneurs and the government is contracting with more minorities;

  • Establishes a National Preferred Lenders Program to reduce paperwork and streamline the approval process for proficient 7(a) lenders;

  • Allows small businesses that need both working capital under the 7(a) program and fixed asset financing under the 504 program to be eligible to receive maximum loan amounts under both programs so they are not forced to choose between them;

  • Expands access to financing for fixed-assets by allowing Certified Development Companies (CDCs) to operate in more communities; clarifies Congressional intent to preserve the purpose of the CDCs to seek out deals that spur community and economic development; sets a new policy goal of expanding businesses in low-income communities and provides incentives to invest in those areas; and creates accountability measures for CDCs;

  • Creates a Child Care Lending Pilot Program to give not-for-profit child care providers access to SBA's 504 loans for fixed assets so that they can increase capacity to care for more children and improve facilities, safer and suitable for ;

  • Directs the SBA to establish an optional standard for determining if a borrower is a small business and eligible for an SBA loan, making it easier to determine who qualifies; and,

  • Tailors the 7(a) loan program to create a simple and flexible loan product to encourage lending in rural areas.