Good afternoon. We're here today to mark up S. 1256, the Small Business Lending Reauthorization and Improvements Act of 2007. This legislation reauthorizes the Small Business Administration's major lending programs, the 7(a) loan guaranty program, which provides working capital to small businesses, and the 504 loan program, which provides loans for fixed assets, such as land and equipment, to small businesses through certified development companies, non-profit organizations which are required to have a strong local economic development focus. And we are also reauthorizing the SBA's three micro-credit programs, including microloans, microloan technical assistance or business counseling, and the Program for Investment in Entrepreneurs or PRIME.

Together these programs will be able to leverage $87 billion in loans to our Nation's small businesses. They fill in a gap not met by the market and play a significant role in underserved areas, including rural areas. These programs encourage lending to Native Americans, to those with disabilities, and to businesses looking to trade with other countries. To encourage lending in low-income communities, the bill coordinates the 504 loan program with the New Markets Tax Credit program. The bill also updates the 7(a) and 504 programs to address more expensive markets and rising interest rates, making it possible to refinance property with 504 loans and get larger 7(a) loans. The bill also makes it possible for small businesses to access 7(a) and 504 loans, giving them the benefits of both programs when they need working capital and fixed-assets. The bill establishes two pilot programs -- one, the Intermediary Lending Pilot Program, to reach businesses that are not eligible for 7(a) and 504 loans but need subordinated debt to finance their growth. And two, a pilot to allow non-profit child care centers to get 504 loans. Last, the bill establishes an office at the SBA to increase business ownership by minorities. For all the programs, it takes steps to reduce red tape and make participation easier to encourage more lenders and non-profits to make small business loans.

Our Committee has a long history of working in a bipartisan way to pass legislation, and I am pleased to have worked closely with my Ranking Member Senator Snowe on this bill. The Small Business Lending Reauthorization and Improvements Act is very similar to S. 3778, the comprehensive SBA reauthorization bill that Senator Snowe put forward last year. Of the 36 sections in the bill, 28 are the same as what was included in S.3778, and all the other provisions in this bill were either passed previously by the Small Business Committee or were included with bipartisan support.

Senator Snowe and I worked very hard to come up with a bill that balanced priorities from our members, and to keep the process open to make sure all members had a chance to weigh in. There were several amendments filed before the mark up by Senators Isakson, Enzi and Bond, and I am pleased that we were able to address their concerns in this managers' amendment which we will be considering shortly. Let me just comment on the issues.

The Senators were concerned and wanted to strike language that would allow us to reduce fees for 7(a) lenders and borrowers because they were concerned about opening the door to making the program rely on appropriations. I think we all agree that we want to reduce the cost of the 7(a) loans to small business borrowers and lenders. And I think we all want to address overpayments. It is only right that we would reduce fees if the government charges too much. For 13 out of the last 15 years, OMB has over-estimated the cost to fund these loans and has taken in $900 million more than is necessary to cover the government's cost. That money doesn't go to SBA. It goes to Treasury. To even have the chance to reinvest that money in small-business loans, we need to fix current law. And we can do it without causing program disruptions or credit rationing. I am glad we worked out language that I hope will allow us to reduce fees.

On the child care lending pilot program, there were some concerns about expanding the 504 program to non-profit child care centers. We all have needs in our states, some more than others. Ten members of this Committee are from states which have waiting lists for children seeking subsidized child care, and those kids are typically served by non-profit centers. We want to try and expand the availability of quality, affordable care, by using loans, not grants, to help families work and help small businesses have reliable employees. It is estimated that child care breakdowns, leading to absences, cost U.S. businesses in excess of $3 billion annually. SBA already does lending to nonprofits, through the microloans and physical disaster loans, and was seeking this year to expand lending to non-profits through SBA's other disaster loan program, for economic injury. I agree that helping these disaster victims is worthy, and unique. But the child care industry is a unique need too, and it doesn't cost us anything to try it since the program is funded through fees. And while they are not for-profit, these child care centers create jobs, and their employees pay taxes, contributing to the larger economy. Even though this Committee has voted to include the child care pilot in the last two reauthorization bills, in 2003 and 2006, some Senators are not comfortable with the pilot. I had compromised with Senator Snowe in 2003 to limit the loans to non-profit child care centers to seven percent of the total loans made, to make sure other businesses were not displaced by lending to nonprofit child care centers, and I kept that bargain when we worked on this year's reauthorization. The substitute today further narrows the pilot, limiting it to the states of members of this Committee. I appreciate my colleagues finding some common ground.

The final issue of concern to Senators Isakson, Enzi and Bond was on the issue of funding for microloans. They wanted SBA to do a study to evaluate the microloan program, which is a bit like having the fox watching the hen house since the Agency has been trying to eliminate the microloan for the last several years. Instead, we worked out a compromise in which GAO will do the study instead.

The programs in this bill are currently operating under a temporary reauthorization which expires at the end of July, and the House has already adopted legislation to reauthorize these programs, so it is time for us to move forward with our legislation. This bill has the support of the two major microloan groups, Friends of the SBA Microloan Program and the Association for Enterprise Oppportunity; the 7(a) trade association, the National Association of Government Guaranteed Lenders or NAGGL; the 504 trade association, the National Association of Development Companies or NADCO; the American Bankers Association; the Independent Community Bankers of America; the National Black Chamber of Commerce; child care associations in Massachusetts and Maine; among others. It is my hope that we can move this bill expeditiously through the Committee and then on the floor. I turn now to Senator Snowe for any comments she may have.