Mr. President, data from the Federal Reserve Bank and the Small Business Administration show that the home mortgage crisis is spreading, making it harder and more expensive for small businesses to get loans. Specifically, according to the Federal Reserve's survey, more than 30 percent of domestic banks indicated that they have tightened their credit standards for commercial and industrial loans to small businesses over the past three months. That same survey also found that 80 percent of the domestic banks reported tighter lending standards for commercial real estate loans—the highest percentage recorded since the Fed began posing the question 18 years ago.

While that information is troubling, it is not a surprise. So far this fiscal year, the number of loans made through the SBA’s largest lending program, the 7(a) loan guaranty program, dropped 14 percent compared with the same period last year, and dollar volume fell six percent. Lending in SBA’s 504 loan program, after growing steadily over the last few years, and being up even three months ago, has gone flat. These figures are alarming because, historically, SBA loan activity has increased when the conventional credit market has tightened and their absence or smaller role in financing is a problem. Why? These two loan programs—the 7(a) Loan Guaranty program and the 504 Loan Guaranty program—are the largest source of long-term capital to small businesses in this country. They play an essential role in the continuum of financing to our small businesses.

As we talked to lenders and SBA to try and understand what was causing this trend, we identified several changes we could make to SBA’s lending programs to try and stimulate the economy. What could we do to get lenders to start lending again, and how could we make it more affordable for small businesses? The bill I am introducing today—the Small Business Lending Stimulus Act of 2008—incorporates those findings. We made the changes temporary, targeted, and timely. We have evidence that these changes work, because we did something similar, in a bipartisan way, after the terrorist attacks of 9-11, and it stimulated the economy and mitigated job loss and business closures by pumping almost $3 billion into our local economies.

Unfortunately, there is no magic bullet to right the economy, but we need to use every tool at our disposal to mitigate further problems for our economy. The SBA’s programs are one effective tool. I hope that my colleagues can get behind this legislation.