WASHINGTON – United States Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu, D-La., and Ranking Member Olympia J. Snowe, R-Maine, today introduced legislation to increase access to capital for small businesses and help create jobs. S. 2869, the “Small Business Job Creation and Access to Capital Act of 2009” would increase the small business loan limit to as high as $5.5 million and extend for a year the fee eliminations and increased guarantee set to expire under the Recovery Act.
“Our nation’s small businesses have created 64 percent of all new jobs in the last fifteen years, yet in the last year nearly 85 percent of the jobs lost have come from small businesses,” Sen. Landrieu said. “Now that we have stabilized Wall Street, it is time to jump-start Main Street, and that begins with implementing the vital provisions within this bill. The loan limit increase could boost SBA lending by $5 billion next year alone, while the refinancing component of the bill could help save 60,000 jobs. To ensure small businesses are able to grow and continue being the job creators they have historically been, we must make these needed changes.”
“The critical initiatives Chair Landrieu and I are introducing today are long overdue, and will give our nation’s entrepreneurs a greater ability to succeed and prosper,” said Ranking Member Snowe. “I have introduced legislation in both the 110th and 111th Congresses to raise the maximum size limits for SBA-backed loans, and this crucial step will give small business owners across the country an improved opportunity to grow their firms. Additionally, by extending the authorization to temporarily provide higher loan guarantees and eliminate fees for borrowers, we are continuing our efforts to build upon what has worked well in the American Recovery and Reinvestment Act. Given the timely need to get 15.4 million unemployed Americans back to work, it is critical that we expeditiously pass this bipartisan bill to help our nation’s small businesses spur a sustained lasting, and job-filled recovery.”
The Recovery Act provided $375 million to increase the guarantee on small business loans and eliminate the fees charged to borrowers. This funding supported $16.5 billion in lending to more than 40,000 small businesses, with borrowers reporting that these loans would save or create more than 450,000 jobs. Unfortunately, this money is almost completely spent and the SBA has been forced to create a waiting list for awarding the final dollars. Since the creation of this waiting list, the weekly SBA loan volume has plummeted far below its pre-Recovery Act volume. Before the Recovery Act, the average weekly loan volume for SBA loans was $114 million. Following implementation of the Recovery Act provisions, the weekly volume increased to $213 million. But in the first full week of lending following the establishment of this waiting list, only $71 million in loans were approved.
The fact that this funding was exhausted faster than scheduled is a testament to its critical nature and effectiveness. As such, by extending these provisions, small businesses could be provided with $18.5 billion in loans to help grow their business and our economy.
Specifically, the “Small Business Job Creation and Access to Capital Act of 2009” would:
- Increase the loan limit on 7(a) loans from $2 million to $5 million;
- Increase the loan limit on 504 loans from $1.5 million to $5.5 million;
- Increase the loan limit on microloans from $35,000 to $50,000 and increase the maximum loan made to a microloan intermediary from $3.5 million to $5 million;
- Allow the 504 loan program to refinance short-term commercial real estate debt into, long-term, fixed rate loans;
- Extend the authorization to provide 90 percent guarantees on 7(a) loans and fee elimination for borrowers on 7(a) and 504 loans through December 31, 2010; and
- Direct the SBA to create a website where small businesses can identify lenders in their communities.
This bipartisan legislation is a result of five hearings and roundtables in the Small Business Committee this year as well as numerous meetings with small business owners. It builds off of S. 1832, the “Small Business Access to Capital Act of 2009,” and S. 1615, the “Next Step for Main Street Credit Availability Act of 2009,” legislation Senators Landrieu and Snowe have previously introduced.
To read Senator Landrieu’s statement for the record, please click here.
To read Senator Snowe’s Statement for the record, please click here.