April 16, 2008

Washington, D.C. -

At today’s hearing of the Senate Committee on Small Business and Entrepreneurship, Ranking Member Olympia J. Snowe (R-Maine) highlighted the need for the Small Business Administration (SBA) to initiate and support improvements that could help alleviate the impact that the subprime market credit crunch is having on America’s small businesses.

"Small Businesses can be at the center of our economic recovery, but not until we expand access to capitol for small businesses and realize the full capacity of the SBA’s core lending programs," said Senator Snowe.

At today’s hearing, Senator Snowe cited her concern regarding the decrease in participating lenders and the decrease in SBA loan volume noting that the combined effect could adversely impact small businesses’ ability to grow and participate in the needed economic recovery.

"What is most concerning is that so far this year, the SBA’s 7(a) loan volume has declined by 17.9 percent while the SBA’s express loan volume has dropped by an overwhelming 28.6 percent," Senator Snowe noted. "Throughout the last two years, 368 banks have stopped participating in the SBA’s 7(a) lending programs. This trends all adds up to fewer loans for fewer small businesses."

Senator Snowe called on SBA Administrator Steve Preston to support three "clear and achievable" measures aimed at reducing the impact of the credit crunch on small businesses. Specifically, she called on the SBA to simplify and streamline its loan process within the next 45 days. This would require no Congressional action, but would be a critical and proactive step the SBA could employ as many lenders and barrowers avoid SBA lending because of how complex the process is to obtain an SBA loan.

She called for passage of S. 1256, "The Small Business Lending Reauthorization and Improvement Act," introduced by Sens. Kerry and Snowe last year. This bill was voted unanimously out of Committee in September and would simplify the SBA’s loan programs while encouraging lenders to participate in those programs, expanding credit to business owners.

Finally, Senator Snowe called for the SBA Administrator to fully support the Kerry-Snowe request for a $1.4 million appropriation to offset the President’s budget proposal to run the 504 loan program at a negative subsidy rate, and $9 million to temporarily (for one year) cover the cost of lender oversight.

"Congress and the Administration must do everything possible to help credit worthy small businesses secure the loans they need to innovate, access new markets, hire new employees, and grow," Senator Snowe said. "With the economy slowing, and large companies laying-off employees, SBA loans will be a crucial part of enabling small firms to survive this downturn."