WASHINGTON - As Congress reviews and debates the President's proposed budget for next year, Sen. John Kerry (D-Mass.) urged the Bush Administration to fully support the Microloan Program for America's small business owners. The last three budgets the President sent to Congress sought to eliminate the program, which lends $35,000 or less to help entrepreneurs with their start-ups and provides business counseling. The Fiscal Year 2008 budget proposal does not eliminate the program, but it provides no funding for it, shifts the costs of the program to non-profits who make the loans, and pushes the counseling onto other SBA business without providing funding. As the President has cut funding for microloans to businesses in this country, he has expanded U.S. funded microloans overseas, including Iraq.
In October 2006 Muhammad Yunus received the Nobel Peace Prize for creating the concept of microcredit to lend money to the poor in 1976, having lent about $5.7 billion to some seven million people. In 2005, the United States spent over $200 million on microloan programs in other countries. Over $54 million in microloans have been disbursed in Iraq, according to U.S. Ambassador Khalilzad and earlier this year the Bush Administration announced plans to continue to pursue a microloan program in Iraq.
"If we can fund microloans in Baghdad, we should fund microloans in Boston and every other city in America," said Kerry, Chairman of the Committee on Small Business and Entrepreneurship. "Unfortunately the President's budget is a tripple whammy for our micro-entrepreneurs right here at home – it raises interest rates, fails to fund the program, and cuts the important counseling assistance component that truly helps them succeed."
The Administration's Support for Microloans in Iraq:
"The efforts of the US government in its assistance to Iraq have been broad based... For example, over $54 million in micro-loans have been disbursed, resulting in 26,700 loans in twelve cities, and the program is set to expand to even more areas. Also, a Loan Guarantee Corporation is currently being established to encourage private banks to make loans to small businesses." –Ambassador Zalmay Khalilzad, U.S. Ambassador to Iraq, May 9, 2006 (http://iraq.usembassy.gov/iraq/20060510_exhibition_amman.html)
"We will help local leaders improve their capacity to govern and deliver public services. Our economic efforts will be more targeted on specific local needs with proven records of success, like micro-credit programs. And we will engage with leading private sector enterprises and other local businesses, including the more promising state-owned firms, to break the obstacles to growth." –Secretary of State Condoleezza Rice, Foreign Relations Committee hearing on the Administration’s Plan for Iraq, January 11, 2007 (http://foreign.senate.gov/testimony/2007/RiceTestimony070111.pdf)