In a letter to President Bush yesterday, Sen. John Kerry [D-Mass.], chairman of the U.S. Senate Committee on Small Business and Entrepreneurship, pleaded for action to help save America’s entrepreneurs. With private banks shutting their doors to struggling business owners, many are turning to the Small Business Administration [SBA] for help, but they’re finding little assistance.
“Since last November, I’ve urged this Administration to prepare for the looming credit crunch,” said Kerry. “In letters and hearings, members of the Committee asked the SBA to step up to help small businesses. Despite the extraordinary financial crisis, the agency has been of little help to the very people they’re meant to serve.”
In September, Kerry introduced the Small Business Lending Market Stabilization Act of 2008 [S. 3596], which temporarily suspends fees for government loans, and Sen. Barack Obama [D-Ill.] has proposed a similar measure. Kerry has also held two hearings on the credit crisis and sent a previous letter to the SBA, urging them to work in a bipartisan manner to help solve the crisis. The SBA has ignored Kerry’s repeated warnings and calls for action.
Kerry’s letter comes as new data shows that lending for the SBA’s largest loan program – the 7[a] lending program, which is the nation’s largest source of long-term small business capital – has fallen by nearly 50 percent, compared with the same period last year. The SBA’s fees for these loan programs, along with banks' rising cost of funds, have made SBA loans out of reach for many entrepreneurs. Small-business owners are having an increasingly difficult time maintaining their businesses, as other sources of credit -- such as credit cards and home equity loans -- are drying up as well.
In addition to temporarily reducing fees, Kerry noted that the Administration could make disaster loans available nationwide, to serve as bridge loans until the rescue package takes effect. A similar approach was used after 9/11 and proved to be helpful.
Among further changes to help stabilize lending in the 7[a] program: allowing weighted average coupons to sell SBA loans on the secondary market; adopting a different rate index, to get the best rate for borrowers and to make the program compatible with other rate standards; and temporarily adjusting the rate cap for the loans, which will make the 7[a] program more efficient and cost-effective and restart the flow of capital to small businesses. Congress is pushing for such changes, but the SBA has the immediate authority to revise the program.
“The Administration should take immediate action to jump-start small-business lending,” said Kerry. “Waiting for a larger bailout of banks isn’t an option for many firms in desperate need of capital. My hope is that the President will see the urgency of this matter, to push the SBA to work with us to save hundreds of businesses and thousands of jobs.”
GoodBiz113's take: Last April, when President Bush helped kick off National Small Business Week, he told the audience of small-business owners and stakeholders, "The truth of the matter is, every day ought to be Small Business Day in America... Small businesses create over two-thirds of all new jobs in America. And if you want your economy to grow, and if you want the country to be hopeful, it seems like you ought to be celebrating the talent and the energy of our small business owners -- daily." Indeed, Mr. President. Now, how about heeding Sen. Kerry's call for bipartisan action to bolster our entrepreneurial endeavors with the financial resources needed today, so that we can continue to fuel America's economy for all -- Democrats, Republicans and Independents alike?
To read the letter that Sen. Kerry sent to President Bush, please click here.
SOURCES: GovTrack.us, Obama for America, Peace Corps Online [photo], U.S. Senate Committee on Small Business and Entrepreneurship, WashingtonWatch.com, WhiteHouse.gov
Get the greenest MacBook ever. Thinner, lighter, more powerful. Customize it today with free shipping.