Verbatim: President Obama Draws Praise for His Commitment to Making Small Business a Top Priority

After his first-ever State of the Union address before a joint session of Congress and the American people last evening, President Barack Obama [pictured with Vice President Joe Biden and House Speaker Nancy Pelosi, in background] drew high praise from two key small-biz stakeholders regarding his agenda to make small business a top priority.

"Tonight, the President made clear that he recognizes the central role small businesses play in our economy," said Rep. Nydia M. Velázquez [D-N.Y.], chairwoman of the U.S. House Committee on Small Business. "His address outlined a broad-based strategy for putting our nation on a path back toward prosperity.

"The tax initiatives the President discussed would spark job growth by helping firms reinvest in their facilities, expand operations and purchase new equipment. Importantly, the President's proposed investments in infrastructure and energy efficiency programs will put more Americans back to work in sectors dominated by small businesses.

"Ultimately, access to capital remains the single biggest obstacle to small-business job growth. So, I was particularly pleased to hear President Obama focus on ways to get credit flowing to entrepreneurs.

"The House has already passed legislation that would support $44 billion in small-business lending and investment. In coming weeks, I look forward to working with the President as we seek ways to improve the flow of capital to small businesses.

"As the President made clear tonight, we will not rest until America's entrepreneurs have the resources necessary to lead our economy forward. After all, small businesses are critical -- not just for immediate job growth, but for rebuilding our economy in the long term."

U.S. Senate Committee on Small Business and Entrepreneurship Chair Mary L. Landrieu [D-La.], who has effectively shepherded small-business job creation measures through her committee, also weighed in on President Obama’s important focus on investing in small businesses to help create jobs.

"Tonight, President Obama made it clear that investing in our Main Street businesses is the quickest way to improve our economy and create jobs," Sen. Landrieu declared. "Small businesses are truly our nation’s job creators, creating 64 percent of all new jobs in the last 15 years. And, yet, this past year, small businesses have been hit the hardest by the economic downturn.

"Nearly 85 percent of the jobs lost came from small businesses. We must invest in our small businesses, because they are the businesses that have bared the greatest burden in this economy, and they are the businesses that have the greatest potential to improve it.

"The first, and fastest, way to boost our small businesses’ ability to create jobs is by giving them greater access to capital and tax credits. President Obama highlighted several ways to do this -- all of which I support, and look forward to hearing more details.

"Another way is by increasing the loan limit cap on small-business loans -- something that President Obama has encouraged, and that I, along with 18 Republican and Democratic Senators, have included as part of S.2869, 'The Small Business Job Creation and Access to Capital Act.' In addition to raising the cap on loans, this bill extends important Recovery Act provisions that have helped to create more than 500,000 jobs in the last year.

"In addition to improving lending for small businesses, President Obama launched the National Export Initiative to help small businesses and farmers increase American-made exports, and help reach a goal of creating 2 million new jobs in America by doubling our exports. Making minor changes to some of the programs that already exist to help small exporters can help us reach the 2 million goal even faster. I, along with Sen. [Olympia] Snowe, made these changes in a bill to boost the exporting potential of small businesses.

"These are simple, inexpensive ways we can make a big impact. I look forward to working with President Obama, his administration and my colleagues in Congress to help our small businesses as we work to create jobs in America.”

The Senate Committee on Small Business and Entrepreneurship passed S.2869, "The Small Business Job Creation and Access to Capital Act," and S.2862, "The Small Business Export Enhancement and International Trade Act," out of committee last December. For more information on the bills, please click here.

Last week, United States Trade Representative Ron Kirk announced that his office is dedicating a high-level post to promoting the interests of small-business exports, a move that Sen. Landrieu repeatedly advocated. To read more about the announcement, please click here.

Several small-business owners sat with First Lady Michelle Obama during last night’s address. They included: Ping Fu of Chapel Hill, N.C.; Chris Lardner of Albuquerque, N.M.; Juan Yépez of Lawrence, Mass.; and Trevor Yager of Indianapolis, In. For biographies of the small-business owners, please click here.

GoodBiz113 Tools
* To view the video and read the transcript of President Obama's first State of the Union address, go to: http://bit.ly/SOTU01272010

* To learn more about S.2869, "The Small Business Job Creation and Access to Capital Act": http://bit.ly/SmallBiz2869

* For an overview of S.2862, "The Small Business Export Enhancement and International Trade Act," visit: http://bit.ly/SmallBiz2862

SOURCES: Library of Congress, U.S. House Committee on Small Business, U.S. Senate Committee on Small Business and Entrepreneurship, The White House [photo by Pete Souza]
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Recovery Act Changes to SBIC Program Mean Increased Funding Available for Small Businesses

Effective today, small businesses that would otherwise have difficulty securing private equity or venture capital may find funding easier to get as a result of changes made as part of the American Recovery and Reinvestment Act to the U.S. Small Business Administration’s Small Business Investment Company program.

"The Recovery Act expands SBA’s venture capital program to increase the pool of investment funding available to the Small Business Investment Companies licensed by SBA," said SBA Administrator Karen G. Mills. "We believe those companies will be better equipped by these changes to help sustain and grow small businesses for their next important growth steps."

SBICs are privately owned and managed venture capital firms which are licensed and regulated by SBA. SBICs use a combination of funds raised from private sources and money raised through the use of SBA guarantees to make equity and mezzanine capital investments in small businesses. There are approximately 338 SBICs, with $17.4 billion in capital under management.

The changes made as part of the Recovery Act are:

* The Recovery Act makes SBICs eligible for greater SBA guaranteed funding, and requires SBICs to invest 25 percent of their investment dollars into "smaller" businesses. Also, the amount of funding an SBIC may invest in a single small business is set at 10 percent of an SBIC’s total capital, rather than the previous limit of 20 percent of an SBIC’s private capital only. This translates to an effective 50 percent increase in funding available to a single business by an SBIC.

* Maximum SBA funding levels to SBICs will increase up to three times the private capital raised by the SBIC -- up to a maximum of $150 million for single SBICs, or up to $225 million for multiple SBICs that are under common control.

* The cap for all licensees was set at $137.1 million before the Recovery Act.

* These limits are even higher for SBICs that are licensed after Oct. 1, 2009, which certify that at least 50 percent of their investments will be made in small businesses located in low-income areas -- up to $175 million for single licensees, and up to $250 million for jointly controlled multiple licensees.

* Changes made to the SBIC program under the Recovery Act are permanent.

Industry associations have commended SBA for these changes, and SBA continues to encourage new SBICs to apply for licensing and actively participate in the program.

The SBIC program was created to stimulate the growth of America’s small businesses by supplementing the long-term debt and private-equity capital available to them. Since the SBIC program’s formation in 1958, it has invested approximately $56 billion in more than 106,000 small businesses in the United States through April 2009.

For more information about the SBA’s Investment Division and SBIC program, go to http://www.sba.gov/INV; e-mail sbic@sba.gov; or, call 1-800-U-ASK-SBA.

SOURCES: Recovery.gov, U.S. Small Business Administration
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Kerry Proposes Economic Help for Small Businesses

Sen. John Kerry [D-Mass.] will introduce legislation this week to provide much-needed assistance and an economic stimulus for small businesses facing tightening credit markets. His bill would provide targeted tax incentives to small businesses to encourage new investments, reduce fees on loans, and double funding for microloans. Kerry will work with his colleagues on the Committee on Finance to try and include the small-business tax provisions in the committee’s stimulus package.

"We need to look at ways to create jobs, and providing help to small businesses through targeted tax incentives and increased access to capital is one of the best steps Washington can take," said Kerry, chairman of the Committee on Small Business and Entrepreneurship. "Small businesses already employ more than half of our country’s workforce, so we need to make sure that entrepreneurs have money in their pockets to continue to grow their businesses."

Sen. Kerry’s bill will increase from $125,000 to $200,000 the amount small businesses can write off their taxes for new investments for 2008 in order to encourage new investments this year. The bill increases the net operating carryback period for losses arising in taxable years ending in 2007 and 2008 from two years to five years. This will help struggling businesses with their cash flow.

In addition, Kerry’s legislation will reduce fees on borrowers and lenders to make credit more affordable, and provide incentive for lenders to make small-business loans. The bill will provide additional funding to leverage nearly $20 million in microloans, which proportionally benefit underserved communities, including women and minorities, more than traditional loan programs.

With banks and lenders becoming more risk-averse, the federally backed loans -- which provide guarantees of anywhere from 50 to 85 percent -- will be increasingly important to spurring economic lending in the small-business sector, so that entrepreneurs aren’t forced to finance their businesses with high-interest credit cards.

According to the National Association of Government Guaranteed Lenders, loans are down 12 percent from this time last year in the largest government-backed small-business loan program, known as 7[a]. The Small Business Administration's 7[a] lending program is the largest source of long-term capital to small businesses in this country. SBAExpress loans — which are approved in weeks, not months, and therefore reflect current economic conditions more accurately — are down 23 percent.

SOURCES: Peace Corps Online [file photo], U.S. Senate Committee on Small Business and Entrepreneurship
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Committee Seeks to Strengthen Key Initiatives for Sustained Economic Development

In many underserved neighborhoods, small businesses are an important engine of growth and revitalization, bringing much needed jobs and commerce. Oftentimes, the individuals wishing to start these businesses have difficulty securing adequate finances, leaving their aspirations stalled in the planning phase.

Today, the House Committee on Small Business examined two key initiatives that support economic revitalization in some of these disadvantaged communities: 1] the Microloan Program, and 2] the Program for Investment in Micro-Enterprise [PRIME] -- both of which fall under the purview of the Small Business Administration [SBA].

"There are many budding entrepreneurs who strive to open their own business, but due to a lack of experience or limited credit history, cannot secure capital," said Nydia M. Velázquez, committee chairwoman. "The microloan and PRIME programs have been instrumental in turning their dreams into reality."

Since its inception in 1994, the microloan program has provided credit to more than 700,000 small firms -- many headed by women, minorities and others who are facing challenges getting their ventures off the ground. These businesses have helped bring economic growth to areas where it is desperately needed, creating or retaining about 10,000 jobs in 2006, according to the SBA.

With a default rate of less than two percent, these investments have not only increased prosperity, but have done so while maintaining a better repayment record than traditional loans made by commercial lenders.

"These programs have been vital in moving people not just from welfare to work, but from welfare to business ownership -- an amazing accomplishment," Chairwoman Velázquez noted.

Despite this record of success, the Bush administration has proposed to eliminate the microloan program each year for the past four years. In its latest budget request, it has recommended increasing the cost of the loans for the borrowers, and to completely eliminate PRIME. At the hearing, members rejected these proposals and outlined ways to strengthen the current programs, making capital more affordable for borrowers.

Currently, microloan recipients cannot use their repayment history to improve their credit score. Building a strong credit history is a challenge for many business owners. By changing the current system, borrowers could improve their credit records, thus increasing the stability of their business and their ability to obtain future funding.

The committee also proposed reducing costs and providing greater flexibility, allowing lenders to better meet the needs of their clients. In striving for these goals, members seek to make loans more accessible for the next generation of entrepreneurs.

"For many aspiring business owners, a microloan is their only option, and we simply cannot allow these entrepreneurs to be left behind," Chairwoman Velázquez said. "The answer is simple: these programs must be permitted to continue, and any proposal to diminish them must be firmly rejected."

GoodBiz113's take: SBA's microloan and PRIME programs need to be sustained in order to help ensure that future businesses can thrive in underserved areas. Further, we'd like to see the changes proposed by Velázquez's committee embraced by her colleagues and the White House, and implemented ASAP.

Sources: PBS [file photo], U.S. House Small Business Committee
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