Bipartisan Landrieu-LeMieux Letter to Treasury Secretary Geithner Urges Swift Implementation of Small-Business Lending Initiatives

Yesterday, United States Senators Mary L. Landrieu [D-La., pictured], chair of the Senate Committee on Small Business and Entrepreneurship, and George LeMieux [R-Fla.] sent a letter to Secretary of the Treasury Timothy Geithner requesting swift implementation of the Small Business Lending Fund [SBLF] and the State Small Business Credit Initiative, two provisions in the Small Business Jobs Act of 2010.

Sens. Landrieu and LeMieux were instrumental in including the SBLF in the Small Business Jobs Act of 2010 -- legislation that has created a $30 billion strategic partnership with community banks to boost lending to small firms.

"As you know, community banks participate disproportionately in small-business lending compared to large banks," Sens. Landrieu and LeMieux wrote in the letter. "With this in mind, it is imperative that we do all we can to assist these community banks in increasing small-business lending. The thoughtfully designed programs in the Act are crucial for community banks across the country. Thoughtful and prudent implementation is also necessary, and we ask that you act as quickly as possible. We urge you to retain small-business access to capital as your top priority in implementing provisions of the Act.

"For months during the crafting of the underlying bill, we heard from bank after bank that would benefit from the Small Business Lending Fund, as well as from the State Small Business Credit Initiative. Since the bill was signed into law on Sept. 27, 2010, our offices have heard from countless additional banks that are eager to access these important programs. Banks who participate will have economic incentives to increase their small-business lending. In turn, this will provide vital support to our small businesses in these difficult economic times."

The Small Business Lending Fund would inject $30 billion through community banks into the small-business economy. This provision is estimated to save taxpayers $1.1 billion over 10 years.

SBLF was endorsed by several organizations, including the Independent Community Bankers of America, American Bankers Association, National Small Business Association, National Association for the Self-Employed, Small Business Majority, National Bankers Association, and the Conference of State Bank Supervisors, among others.

The State Small Business Credit Initiative provides $1.5 billion in grants to support at least $15 billion in new small-business lending through already-successful state-run programs. Many of these state-run programs are facing cutbacks due to budget shortfalls, and this initiative will allow states to build upon successful models for state small-business programs, including Capital Access Programs [CAPs], collateral support programs, and loan guarantee programs -- including those targeted at rural and agricultural small businesses.

To view the full text of the letter sent to the Treasury Department, go to: http://bit.ly/LandrieuLeMieuxLetter.

GoodBiz113's Take
Who says that Washington is devoid of bipartisanship? This is a prime example of how Democrats and Republicans can actually work together -- in this case, on behalf of small businesses.

Kudos to Sens. Landrieu and LeMieux for doing what Americans want our elected officials to do: cooperate and collaborate for the greater win-win-win good.

SOURCES: OpenCongress, U.S. Senate Committee on Small Business and Entrepreneurship, U.S. Small Business Administration, The White House
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President Obama Hails Auto Industry Successes, Calls on Senate Republican Leaders to 'Stop Holding America's Small Businesses Hostage to Politics'

In this week's address -- delivered from the General Motors automobile assembly plant in Detroit/Hamtramck, Mich. -- President Barack Obama praised the successes of the auto industry's restructuring. When his Administration decided to invest in the American car companies, some said such a move was bound to fail. But since GM and Chrysler have emerged from bankruptcy, the auto industry has added 55,000 jobs -- the strongest growth in 10 years -- and, for the first time since 2004, all three companies are operating at a profit.

The President also called on Republican leaders in the Senate to stop blocking a vote on a bill helping small businesses. Even though this bill will help the nation's recovery, and has been endorsed by groups such as the Chamber of Commerce and the National Federation of Independent Business [NFIB], the Republican Senate leadership continues to hold it hostage to politics by denying an up-or-down vote on the bill.

To view the video of President Obama's weekly address, go to: http://bit.ly/Video07312010

To read the transcript of the President's weekly address, please visit: http://bit.ly/Transcript07312010

To learn more about H.R. 5297 -- The Small Business Jobs and Credit Bill of 2010, go to: http://bit.ly/HR5297

SOURCES: Library of Congress, The White House [photo by Pete Souza]
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House Passes Small-Business Capital Bill; Initiative Would Reinvigorate Investment in Small Businesses

Yesterday, the U.S. House of Representatives passed the Small Business Lending Fund Act of 2010, H.R. 5297, by a vote of 241-182. The legislation will aid small businesses in securing capital through new community bank incentives, support for state lending initiatives, and by opening venture-capital markets to small businesses.

"Today, under the leadership of Speaker Pelosi, Majority Leader Hoyer, Chairman Frank, Chairman Levin and Chairwoman Velázquez, the House of Representatives took strong action to help continue moving our nation's economic recovery forward," declared U.S. Treasury Secretary Tim Geithner. "At a time when too many small businesses are struggling to find access to the credit they need to hire and expand, this legislation will help ensure that Main Street entrepreneurs are better positioned to create new jobs and invest in their local communities."

The legislation passed by the House includes two key lending initiatives put forward by the Administration:

1] A Small Business Lending Fund that will provide small banks with capital and incentives to extend more credit; and

2] A State Small Business Credit Initiative to support innovative state small business programs -- many of which have been threatened by budget shortfalls.

"The lending initiatives passed today, along with the elimination of capital-gains taxes on small business investments approved by the House earlier this week, will help make certain that small businesses can play a critical role in building and sustaining our nation's economic recovery," Geithner added. "The Administration urges the Senate to take swift action on a package of measures to support small businesses, and looks forward to working closely with Congress as they move to finalize this legislation."

Rep. Nydia M. Velázquez [D-N.Y., pictured], chairwoman of the House Committee on Small Business, was pleased by yesterday's development. "As our most prolific job creators, small businesses will be central to the recovery of the U.S. economy," she said. "However, for entrepreneurs to expand and create jobs, they need access to financing. The measure we approved will make both credit and equity capital available for small firms."

While the legislation would establish a new $30 billion lending fund for community banks -- which proponents say would provide $300 billion in lending to entrepreneurs -- key changes were made during debate of the bill to ensure Main Street businesses benefit from the legislation:

* Rep. Glenn Nye [D-Va.] authored safeguards in the bill that will require banks to substantially boost their small-business lending to qualify for funds; and

* To further assist small firms, language prepared by Rep. Kurt Schrader [D-Ore.] would establish a new borrower assistance program, providing additional funds to small businesses who take out loans. The funds can be used at the entrepreneur's discretion to reduce their interest rates, defer their loan or cover monthly payments.

"Since the onset of the financial crisis, much has been done to shore up our nation's banks, but entrepreneurs' needs have gone unmet," Velázquez said. "These amendments will make sure that small businesses benefit from the current proposal, and I thank Mr. Nye and Mr. Schrader for offering them."

With the capital markets evolving, small businesses are increasingly looking beyond debt financing to equity capital to meet their financing needs. While entrepreneurs have traditionally used assets like real estate to secure loans, more and more business owners today seek financing based on their strengths; e.g., scientific expertise, research technologies, and potential for commercialization. For these firms, investment capital is a better financing solution.

To account for these economic changes, the legislation contains provisions aimed at reinvigorating investment in small start-ups. By establishing a new Small Business Early-Stage Investment Program, funds from the SBA will be paired with private capital to invest in small start-ups.

"In a world where revolutionary new products are conceived in dorm rooms and companies are born in garages, we need new ways of meeting businesses' capital needs," Velázquez noted. "The Small Business Early-Stage Investment Program recognizes this fundamental shift, taking steps to meet the capital needs of new businesses and helping them create jobs."

GoodBiz113's Take
This critical legislation is just the stimulus that U.S. small businesses need in order expand and create even more jobs for our nation's economic recovery. Kudos to Rep. Velázquez and her colleagues for propelling such far-reaching policy.

SOURCES: Community Development Venture Capital Alliance [CDVCA], Library of Congress, OpenCongress, U.S. Department of the Treasury, U.S. House Committee on Small Business, The White House
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