Sens. Landrieu, Kerry Introduce Legislation to Boost Broadband Internet Access for Small Business

United States Senators Mary L. Landrieu [D-La.], chair of the Senate Committee on Small Business and Entrepreneurship, and John F. Kerry, [D-Mass., pictured] introduced legislation to better assist small-business owners in accessing broadband Internet technology.

The "Small Business Broadband and Emerging Technology Enhancement Act of 2010" [S. 3506] addresses many of the recommendations from the Federal Communications Commission’s [FCC] March 2010 report -- entitled "Connecting America: The National Broadband Plan" -- which calls for increased broadband access for rural small businesses.

"Improving access to technology for small businesses, particularly in rural areas, is an important component to economic recovery," said Sen. Landrieu. "With access to broadband Internet, a small firm that once was confined to a single town has the ability to reach a new customer base on the opposite side of the world. Louisiana is home to some of the most rural, underserved areas in the country. By assisting rural firms in upgrading their technology, I am committed to making these small businesses play an active role in jump-starting local economies.

"The FCC has done an extensive evaluation of the effects of advanced technology on small-business growth. The adoption of many of the recommendations of this report will support small businesses interested in expanding their operations. The Small Business Committee is dedicated to providing added assistance to these small businesses, and this legislation puts us on the path to doing so."

Sen. Kerry, a member of the Small Business Committee and its former chair, noted that the legislation will serve his constituents well. "Universal broadband access will empower small businesses across Massachusetts," he said. "It means greater connectivity for employees, while giving local businesses global access, allowing a shop in Western Massachusetts to make sales in Western Europe.

"Today, broadband is essential to the success of our small businesses. I commend Sen. Landrieu for championing the effort to connect them."

The legislation introduced by Sens. Landrieu and Kerry would:

* Create a Broadband and Emerging Technology Coordinator within the SBA to better coordinate agency programs that assist small businesses in adopting, making innovations in, and using, broadband and other emerging technologies;

* Amend the mission of Small Business Development Centers [SBDCs] to include assisting small businesses in accessing broadband and other emerging technologies;

* Amend the mission of the Women’s Business Centers [WBCs] to include assisting women-owned small businesses in accessing broadband and other emerging technologies;

* Allows SBA 7[a], 504, and Microloan programs to include upgrading broadband technology under eligible uses;

* Create the "Rural Small Business Technology Pilot Program" to provide excess government-owned computers each year to qualified small businesses at little or no cost; and

* Require the SBA administrator, in consultation with the administrator of General Services, to submit a report to the committee on opportunities at SBA, through deployment of technology in its district offices, to assist with the development of broadband and wireless technology for local small businesses.

In April, the Small Business Committee held a hearing to discuss efforts to increase broadband accessibility. The hearing specifically highlight the FCC National Broadband Plan, which included several Landrieu recommendations. Yos can view information from the hearing at: http://bit.ly/BroadbandHearing.

Resources
To view the complete text of the "Small Business Broadband and Emerging Technology Enhancement Act of 2010," S. 3506, please go to: http://bit.ly/SmallBizBroadband2010.

To keep apprised of national broadband-related developments and events, please visit: http://www.broadband.gov/.

To read the complete text of the FCC's National Broadband Plan, please go to: http://www.broadband.gov/plan/.

SOURCES: Federal Communications Commission, Library of Congress, U.S. Senate Committee on Small Business and Entrepreneurship
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President Obama Signs Extension for SBA-Backed Recovery Loans; Small-Business Recovery Act Lending Now Extended Through May

Late Thursday evening, President Barack Obama [pictured] signed legislation providing $80 million in additional funding to continue important enhancements in the U.S. Small Business Administration’s two key small-business loan programs.

The enhancements, first made available under the American Recovery and Reinvestment Act [ARRA], include a higher guarantee on some SBA-backed loans and small-business fee relief. The SBA estimates the $80 million will support about $2.8 billion in small-business lending under the 7[a] and 504 programs.

Administrator Mills Presses for Longer-Term Extension of Successful Programs
"Small businesses across the country have been able to secure critical financing as a result of the Recovery Act loan provisions and the continued interim funding we’ve received for the program," said SBA Administrator Karen Mills. "The increased guarantees and reduced fees on SBA loans have generated more than $25 billion in new loans to small-business owners and brought more than 1,200 lenders back to SBA loan programs.

"In fact, the first two quarters of the current fiscal year have been our best two opening quarters ever for the 7[a] program, with more than $7 billion in guaranteed loans. These programs have been successful in helping jump-start our economy, which is why we will continue to work with Congress on a longer-term extension of the increased guarantee and reduced fees.

“We also know that small businesses could greatly benefit from the additional tools the President has proposed -- including higher SBA loan limits and refinancing for commercial property mortgages, which could help thousands of small businesses avoid potential foreclosure. Small businesses need these improvements to ensure their access to the capital they need to drive economic growth and create jobs in communities all across the country."

As part of the Recovery Act, enacted on Feb. 17, 2009, SBA received $730 million to help small businesses -- including $375 million to increase the SBA guarantee on 7[a] loans to 90 percent, and to reduce borrower fees on most 7[a] and 504 loans. The funds for these programs were exhausted on Nov. 23, 2009, and an additional $125 million was provided in December. Those funds were exhausted in late February 2010, and an additional $60 million was subsequently provided. SBA was authorized for an additional $40 million in late March.

Under the new extension, SBA may continue to reduce loan fees in its 7[a] and 504 programs, and to provide higher guarantee levels on 7[a] loans through May 2010 -- or until the funds provided under the bill are exhausted.

This extension has no effect on the continued availability of financing under other SBA Recovery Act programs -- including SBA’s America’s Recovery Capital [ARC] loan program, and the agency’s Microloan program. Recovery Act funding still remains available for both of those programs.

For more information about SBA's efforts to promote far-reaching economic recovery, go to http://bit.ly/SmallBizRecovery.

SOURCES: Recovery.gov, U.S. Small Business Administration
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President Obama Announces New Small-Business Lending Initiatives

This afternoon, President Barack Obama [pictured above with Treasury Secretary Tim Geithner and SBA Administrator Karen Mills], announced his proposal to boost lending support of small businesses, so as to promote even further business expansion and job creation.

Speaking from Metropolitan Archives, a small records-storage business based in Landover, Md., President Obama reflected on the heretofore impact of the American Recovery and Reinvestment Act of 2009; outlined specifics of his proposed lending initiatives; and provided a sneak preview of a small-biz-focused conference that Geithner and Mills will convene in the near future.

"Over the past decade and a half, America's small businesses have created 65 percent of all new jobs in the country," Obama noted. "And more than half of all Americans working in the private sector are either employed by a small business or own one -- more than half. These companies are the engine of job growth in America. They fuel our prosperity. And that's why they have to be at the forefront of our recovery.

"The problem is, our small businesses have been some of the hardest hit by this recession. From the middle of 2007 through the end of 2008, small businesses lost 2.4 million jobs. And, because banks shrunk from lending in the midst of the financial crisis, it's been difficult for entrepreneurs to take out the loans they need to start a business. For those who do own a small business, it's been difficult to finance inventories and make payroll, or expand if things are going well.

"And that's why we made sure the Recovery Act focused on helping small businesses expand and create jobs. In it, we temporarily reduced or eliminated fees on SBA loans -- loans that give small businesses more money to reinvest in their own futures. And we guaranteed some of these loans by up to 90 percent, which has given local banks and credit unions the confidence they need to lend.

"In the last eight months, these steps have made a real difference for small businesses across America. So far, the Recovery Act has supported over 33,000 loans to small businesses that have already helped save or create nearly tens of thousands of jobs -- nearly $13 billion in new lending -- $13 billion. And more than 1,200 banks and credit unions that had stopped issuing SBA loans when the financial crisis hit are lending again today. And more than $4.3 billion in federal contracts are now going to small businesses.

"We're also providing tax relief to small businesses under the Recovery Act -- relief that will give these businesses back over $5 billion this year. And we're giving tax cuts directly to 95 percent of working Americans, which includes the vast majority of small-business owners and their employees.

"So there's no question that our Recovery Act has given a boost to every American who works at a small business, or owns one, or aspires to own one. There's no question that the steps we've taken have improved the overall climate for small business across the country.

"But there's also no question that we've got a long way to go. There's still too little credit flowing to our small businesses. There's still too many entrepreneurs who can't get the loans they need to open up their doors and start hiring. There's still too many who are struggling to make payroll and to stay open. And there's still too many successful small businesses that want to expand further and hire more but just don't have the capital to do it."

Specifically, President Obama called for:

* Increasing the size of SBA’s 7[a] loan from $2 million to $5 million;

* Increasing the size of SBA’s 504 loan from $2 million to $5 million for standard borrowers [supporting a total project of $12.5 million], and from $4 million to $5.5 million for manufacturers [supporting a total project of $13.75 million]; and

* Increasing the size of SBA’s Microloan from $35,000 to $50,000.

"Finally," President Obama added, "I've asked Tim Geithner and Karen Mills to convene a conference in the coming weeks that will bring together regulators, congressional leaders, lenders and small businesses to determine what additional steps we can take to get credit flowing to small businesses that want to expand and create more jobs.

"Of all the steps we're taking to move this economy from recession to recovery, I continue to believe that the success of our small businesses will be a foundation upon which our future prosperity is built. So we will continue to do whatever we can to help these businesses grow and thrive. And I'm confident that the steps we announced today will do that for small-business owners across the country -- men and women we hear from every day."

Administrator Mills Comments on President Obama’s Proposal to Raise SBA Loan Limits
Following President Obama's announcement to raise the maximum loan size for SBA-backed loans to small business, SBA Administrator Mills issued the following statement:

"America’s 29 million small businesses have been hard-hit in this recession. Nine months ago, President Obama sent small businesses a lifeline: the American Recovery and Reinvestment Act. Since then, the SBA has supported more than 33,000 loans for a total of almost $13 billion in small-business lending. This has helped save or create tens of thousands of jobs.

"But there is much more work to be done, which is why President Obama today pledged his support for legislation that would increase the maximum size of some SBA loans. Increasing maximum loan sizes will allow the SBA to ensure that more small-business owners and entrepreneurs can get access to the credit they need to expand their operations and create jobs.

"The President also announced additional support from the Treasury Department for smaller community lenders that are committed to increasing their lending to small businesses. Secretary Geithner and I will host a conference on small-business lending with members of Congress, regulators, lenders and the small-business community. The conference will discuss additional efforts that can be taken to provide small businesses with access to credit. These steps, coupled with SBA’s ongoing efforts, will help small businesses grow and create jobs throughout America."

Rep. Velázquez Applauds, Looks Forward to "Swiftly Moving" Small-Business Lending Legislation
Shortly after President Obama's speech, Rep. Nydia M. Velázquez [D-NY], chairwoman of the U.S. House Committee on Small Business, commented on the Administration's plan for helping small businesses access credit:

"I applaud the President for reaffirming his support for our nation's small businesses and recognizing their importance to the economic recovery. With the Administration's March announcement, and again today, the President has made clear that he is committed to getting entrepreneurs the help that they need. As the Administration refines the details of this plan, I am sure they will closely consult lenders, the small-business community and Congress, and I look forward to participating in that dialogue.

"In working to increase access to capital, it is important to pursue policies that will open doors for, and enhance the opportunities, of small firms. Duplicating existing programs or instilling initiatives that only benefit the lenders does nothing to help grow our economy.

"The ultimate goal is to get affordable capital into the hands of small businesses. That is why the Committee today approved bipartisan legislation to comprehensively modernize the SBA's capital-access initiatives. This bill is expected to support $44 billion in small-business lending every year, helping to save or create 1.3 million jobs annually. I look forward to swiftly moving this legislation through the House and working with my colleagues to get this bill to the President for his signature."

To view the video of President Obama's speech, go to: http://bit.ly/ObamaVideoSmallBiz

The full text of President Obama's remarks can be found here: http://bit.ly/ObamaRemarksSmallBiz

A fact sheet on President Obama's proposal to increase SBA loan size can be found at: http://bit.ly/ObamaFactsSmallBiz

A fact sheet on FinancialStability.gov's Small Business and Community Lending Initiative, titled "Unlocking Credit for Small Businesses," is available at: http://bit.ly/FinancialStabilitySmallBiz

To track Recovery Act-related developments, go to: http://www.recovery.gov/

For information about federal contracting opportunities, go to: http://www.fedbizopps.gov/

SOURCES: U.S. Department of the Treasury, U.S. House Committee on Small Business, U.S. Small Business Administration, White House [photo by Pete Souza]
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Recovery Act Funding to Expand Microlending to Small Businesses Across the U.S.

With the American Recovery and Reinvestment Act funding an additional $50 million for loans, plus $24 million for technical assistance, the U.S. Small Business Administration [SBA] is expanding its Microloan program and increasing access to capital for small businesses across the country.

The program is shifting to funding provided under the Recovery Act, now that it has exhausted the regular FY 2009 appropriations for $20 million in loans and $20 million in technical assistance. With the additional resources, SBA is focused on adding new lenders and encouraging entrepreneurs to seek out SBA-backed microlenders to finance their businesses.

"SBA’s Microloan program provides a critical source of capital for entrepreneurs -- including women, low-income individuals and minorities, who often have difficulty obtaining capital to start and grow their businesses," said SBA Administrator Karen G. Mills. "With these resources, we can put more entrepreneurs and small-business owners in a position to succeed and create jobs that will, in turn, help drive our nation’s economic recovery."

Since the Recovery Act, SBA has approved eight new applications from lenders to join the Microloan program, and has 15 new loans to microlenders for $10.7 million in Recovery Act funds ready to be disbursed. Of those 15 loans, eight are for new microlenders.

The approved new microlenders are: Vermont Community Loan Fund Inc., of Montpelier, Vt; Neighborhood Development Center, of St. Paul, Minn.; Cen-Tex Certified Development Corp., of Austin, Texas; The Emperor Organization, of Tallahassee, Fla.; Staunton Creative Community Fund Inc., of Staunton, Va.; Lane MicroBusiness [d.b.a. eDev], of Eugene, Ore.; FINANTA [formerly known as American Street Financial Services], of Philadelphia, Pa; and ACCION USA Inc., of New York, N.Y.

SBA’s Microloan program supports microlenders by providing them with up to $3.5 million in low-cost loans from SBA to finance their lending to small businesses. SBA’s interest rate to microlenders is based on the five-year Treasury rate, with adjustments tied to a microlender’s average loan size.

Microlenders use the SBA funding to provide loans of up to $35,000 to entrepreneurs. Loans can be used for working capital and acquisition of materials, supplies, furniture, fixtures and equipment.

SBA also provides grant funding to microlenders, to finance technical assistance and counseling programs for their borrowers -- including staff, classroom training, and occupancy costs. SBA’s reimbursement is capped at 25 percent of the microlender’s outstanding SBA loan portfolio.

Organizations interested in becoming SBA microlenders must meet specific criteria -- in terms of organizational status, microlending experience, and matching requirements from non-federal sources. For more information, please visit: http://www.sba.gov/services/financialassistance/sbapartners/microloan; e-mail microloans@sba.gov; or, call 202-205-6485.

Entrepreneurs who wish to learn about SBA's Microloan program can visit: http://www.sba.gov/services/financialassistance/sbaloantopics/microloans/index.html.
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President Obama's First 100 Days Include $730 Million Jump-Start for America's Small Businesses

Today, as the nation marks President Barack Obama's first 100 days in office, small businesses can celebrate the strides that Obama has made on our behalf -- primarily, via the landmark American Recovery and Reinvestment Act of 2009 [Recovery Act], which he signed into law on Feb. 17, 2009. It is an unprecedented effort to jump-start America's economy; create or save millions of jobs; and put a down payment on addressing long-neglected challenges, so that our country can thrive in the 21st century.

The economic stimulus bill is an extraordinary response to a crisis unlike any since the Great Depression, and includes measures to modernize our nation's infrastructure; enhance energy independence; expand educational opportunities; preserve and improve affordable health care; provide tax relief; and protect those in greatest need.

Recovery Act Provides $730 Million to SBA
According to the U.S. Small Business Administration [SBA], the Recovery Act will have a significant impact on small businesses and on the credit crunch, providing tax incentives and financing opportunities that will help us create jobs.

The Recovery Act makes SBA part of the solution, providing it with specific tools to make it easier and less expensive for small businesses to get loans, give lenders new incentives to make more small business loans, and help unfreeze the secondary markets to boost liquidity in the credit markets.

More details on implementation will be coming during the next few weeks. For now, though, take note that the bill provides $730 million to SBA, and makes changes to the agency’s lending and investment programs so that they can reach more small businesses that need help.

The funding includes $375 million for temporarily eliminating fees on SBA-backed loans and raising SBA's guarantee percentage on some loans to 90 percent. The elimination of fees, announced on March 16, will remain in effect until the end of the calendar year or until the funding is exhausted. The elimination of fees is retroactive to the day the Recovery Act was signed into law.

Additional funding provisions include:

* $255 million for a new loan program to help small businesses meet existing debt payments

* $30 million for expanding SBA’s Microloan program -- enough to finance up to $50 million in new lending and $24 million in technical assistance grants to microlenders

* $20 million for technology systems to streamline SBA’s lending and oversight processes

* $15 million for expanding SBA’s Surety Bond Guarantee program

* $25 million for staffing up to meet demands for new programs

* $10 million for the SBA's Office of Inspector General

For more information about how SBA intends to implement Recovery Act funding, go to: http://www.sba.gov/recovery/information/index.html.

Next Steps
President Obama will conduct a prime-time news conference tonight on CBS, ABC, NBC, CNN, MSNBC and CNBC at 7 p.m. CST. In case you miss watching and/or recording the live event, CNN will rebroadcast the news conference at 12 a.m. CST.

TIME photographer Callie Shell has compiled a fascinating collection of photos depicting President Obama's first 100 days in the Oval Office. Several are published in the May 4 issue of TIME magazine. You can also view the entire photo essay online at http://time.com/100days.

SOURCES: U.S. Small Business Administration, White House
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SBA Applauds Stimulus Bill; Planning Underway For Broadest, Quickest Small-Business Impact

Yesterday, President Barack Obama signed the $787 billion economic stimulus bill -- AKA the American Recovery and Reinvestment Act of 2009 -- into law in Denver, saying, "We have begun the essential work of keeping the American Dream alive in our time."

The American Recovery and Reinvestment Act contains a package of loan fee reductions, higher guarantees, new U.S. Small Business Administration [SBA] programs, secondary market incentives, and enhancements to current SBA programs that will help unlock credit markets and begin economic recovery for the nation’s small-business sector.

"The tax incentives and credit stimulus elements of the Recovery Act will truly help small-business owners affected by the credit crunch, and will provide financing opportunities to help them create new jobs in their communities," said Acting SBA Administrator Darryl K. Hairston.

"There’s a lot to digest in the legislation, and SBA has established teams to tackle a wide variety of policy decisions, system modifications, regulatory changes, legal requirements, and new program launches authorized by the President and Congress," Hairston noted.

The bill provides $730 million to SBA, and makes changes to the agency’s lending and investment programs so that they can reach more small businesses that need help. The funding includes:
* $375 million for temporary fee reductions or eliminations on SBA loans, plus increased SBA guaranteed shares -- up to 90 percent for certain loans
* $255 million for a new loan program to help small businesses meet existing debt payments
* $30 million for expanding SBA’s Microloan program -- enough to finance up to $50 million in new lending, plus $24 million in technical assistance grants to microlenders
* $20 million for technology systems to streamline SBA’s lending and oversight processes
* $15 million for expanding SBA’s Surety Bond Guarantee program
* $25 million for staffing up to meet demands for new programs
* $10 million for the Office of Inspector General

The bill also authorizes refinancing for certain SBA loans -- so borrowers can expand their businesses on favorable terms -- and expands leverage capability for Small Business Investment Companies [SBIC].

"We are going to be part of the solution, and this bill gives us specific tools to make it easier and less expensive for small businesses to get loans, give lenders new incentives to make more loans, and help restore healthy SBA secondary markets to boost liquidity," Hairston said, noting also that more details on implementation will be coming over the next few weeks.

The stimulus bill takes a comprehensive approach, and attacks several problems facing small businesses at once by reducing fees; guaranteeing a greater share of certain loans; expanding capacity in the Microloan program; providing new loans to help small businesses keep their doors open through economic hardship; as well as new mechanisms to help unfreeze the secondary markets for SBA-backed loans.

Declines in SBA lending volume last year, which are continuing in FY 2009, reflect problems in the broader credit markets, and present hurdles to small businesses that are seeking credit in the current economy. The financial crisis has created a variety of conditions that impact small businesses -- including a lack of liquidity in the banking system; a reluctance of many lenders to extend new loans; tightened credit standards; weaker finances at small businesses; and uncertainty about taking on new debt on the part of many entrepreneurs.

The Recovery Act addresses small businesses’ lending problems, and addresses key investment and contracting issues. The bill helps Small Business Investment Companies better leverage investment capital to reach more small companies. The bill also increases the current contract limit for SBA’s Surety Bond Guarantee program, which will help small businesses compete for contracts.

Among the specific SBA-related components of the Recovery Act:

90 Percent Guarantee
The bill allows SBA to raise its loan guarantee from the current levels to as much as 90 percent for some loans. At present, SBA can guarantee loans up to 85 percent on loans up to $150,000, and up to 75 percent on loans greater than $150,000. The 50 percent guarantee on SBA Express loans would remain unchanged. Increasing the SBA guarantee percentage will encourage lenders to extend more capital to small businesses by increasing the share covered by an SBA guarantee.

Business Stabilization Loans
The bill creates a new SBA loan program to provide deferred-payment loans of up to $35,000 to viable small businesses that need the money to make payments on an existing, qualifying loan for up to six months. These loans will be 100 percent guaranteed by SBA. Repayment would not have to begin until 12 months after the loan is fully disbursed. The bill provides $255 million for this new program. These loans will help ensure that small businesses have time to re-focus their business plans in order to succeed in the long run.

Microloans
The bill expands SBA’s Microloan program, which provides small loans [up to $35,000] paired with technical assistance to start-up, newly established or growing small businesses. The bill provides funding to increase loans from SBA to participating Microlenders by $50 million through Sept. 30, 2010, and adds $24 million in grants to provide technical assistance to borrowers. Historically, these loans reach low-income individuals, women and minorities in both rural and urban areas. Expanding this program through the stimulus bill will help ensure these entrepreneurs are not left behind in the credit crunch.

Refinancing
The bill also gives SBA the power to use the 504 Certified Development Company program to refinance existing loans for fixed assets, providing fresh support for small business expansion. This change will help business owners expand their current development projects and create jobs in their communities.

Secondary Market Expansion
The bill authorizes SBA to establish a secondary market for pools of "first lien" loans under the 504 program. These "first lien" loans from commercial lenders currently have no SBA guarantee. The bill authorizes SBA to deploy federal guarantees for pools of these first lien loans, so that they can be sold to investors in a secondary market. Providing liquidity for these first mortgages will help encourage lenders to continue participating in SBA’s 504 loan program, which provides a key source of capital for community development and other projects.

The bill also empowers SBA to set up a Secondary Market Lending Authority that would make direct loans to broker-dealers that participate in the secondary market for SBA-guaranteed 7[a] loans. These broker-dealers would use the funds to purchase SBA-backed loans from commercial lenders, assemble them into pools, and sell them to investors in the secondary loan market. This program may help address some of the issues facing the secondary market for SBA loans and may ultimately help SBA lenders make new loans to borrowers.

Investment Program
The bill helps SBA-licensed Small Business Investment Companies [SBICs] and families of SBIC funds better leverage the capital they use to invest in small businesses. The bill sets maximum levels of funding the agency can provide to these companies at up to three times the private capital raised by those companies, or $150 million, whichever is less. It also raises the percentage any one SBIC can invest in a single small business to 10 percent of total capital, and raises from 20 percent to 25 percent the percentage of any licensee’s dollar investments that must be made in "smaller" businesses.

Surety Bonds
The bill also raises the maximum contract amount that can be covered by an SBA guaranteed surety bond from $2 million to $5 million -- and, under certain circumstances, for contracts amounting to $10 million -- and provides additional funds to cover the costs of expanding this program. Small businesses need surety bonds in order to bid on, and obtain, many federal and other contracts. SBA guarantees surety bonds to small businesses that private surety companies would not otherwise be able to extend.

GoodBiz113's take: The American Recovery and Reinvestment Act promises far-reaching opportunities for U.S. communities, citizens, lenders and investors -- as well as our country's 26 million-and-counting small businesses. The stimulus package's thoughtful and bold components deserve full faith and support across the political spectrum, so that President Barack Obama -- and, thus, America as a whole -- can succeed. To track the Recovery Act's progress, bookmark Recovery.gov [www.recovery.gov/] and/or FinancialStability.gov [www.financialstability.gov/].

SOURCES: Associated Press, Recovery.gov, U.S. Government Printing Office, U.S. Small Business Administration
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Kerry Calls for Action to Help Small Businesses Facing Credit Crunch; $212 Million Would Boost SBA Loan Programs

A report just released by the Federal Reserve found that more than half of America’s banks have tightened lending standards to small businesses. Yesterday, Sen. John Kerry [D-Mass.], chairman of the U.S. Senate Committee on Small Business and Entrepreneurship, called for the passage of his legislation to increase lending to small firms by reducing fees.

"The credit crunch has gotten even worse," said Kerry. "Over half of our banks have tightened their lending standards, making it harder for small businesses to expand their payrolls and invest in new equipment. The Bush administration and Republicans in Congress have bailed out Wall Street, and done nothing to help small businesses on Main Street.

"Today’s Fed report just underscores the need to pass my legislation to lower fees and stimulate lending for the largest source of new jobs: America’s small businesses."

The Fed’s quarterly survey can be viewed at: http://www.federalreserve.gov/boarddocs/snloansurvey/200805/fullreport.pdf.

In February, Kerry introduced the Small Business Lending Stimulus Act [S. 2612] to temporarily reduce fees on government-backed loans to small businesses. At a hearing before the Committee on Small Business and Entrepreneurship last month, bankers and small businesses testified that reducing loan fees would be a big help in increasing loans to entrepreneurs.

Kerry’s bill would provide nearly $200 million to cut borrower and lender fees in the Small Business Administration’s 7[a] loan program for working capital, and the 504 loan program for financing fixed assets. It would also provide $12 million for the microloan program and allow small firms to refinance business debts using the 504 loan program.

SOURCES: Federal Reserve, GovTrack.us, U.S. Senate Committee on Small Business and Entrepreneurship [photo]
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Bush Budget a Bust for America's 27 Million Small Businesses

Today, Sen. John Kerry [D-Mass.] said the president's proposed budget cuts critical small-business programs and falls short of repairing the deep cuts to the agency over the last seven years. Excluding disaster loan funding, the proposed budget for next year represents a 28 percent cut for the Small Business Administration [SBA] since President Bush took over in 2001 – the largest cut of all the federal agencies – and a three percent cut from 2008 appropriations. The president's request of $657 million, including disaster loan program funds, for the SBA is only 0.02 percent of the entire $3.1 trillion budget.

"Unfortunately, this budget is more of the same from the Bush administration for America’s 27 million small businesses," said Kerry, chairman of the Committee on Small Business and Entrepreneurship. "The Bush budget fails to provide the critical investment to finance startups and grow existing businesses.

"Last year, nearly 900,000 jobs were created or retained due to government-backed loans and venture-capital deals to small businesses. But we’re already seeing these loans on the decline this year as a result of the mortgage crisis, so we need to do everything we can to boost these programs. This is not the time to be making cuts."

Once again, the Bush administration proposes no funding for small-business loan programs, and deeply cuts counseling and outreach programs; e.g., Small Business Development Centers [SBDCs], Women's Business Centers [WBCs], and technical assistance programs.

"The significant proposed cuts to business counseling programs will have a detrimental impact on our ability to help small businesses succeed," Kerry noted. "I will work with my colleagues in a bipartisan way to reverse the severe Bush administration cuts -- just as the Democratic-led Congress did last year, when we restored $40 million to core small-business programs."

Specifically, the proposed 2009 budget:

* Lacks funding for loans and venture capital programs. The budget yet again provides no funding for the SBA’s largest loan programs – 7[a] and 504 – and provides no increase in the authority to back new loans. The president has recommended a program level of $17.5 billion for 7[a] loans, and $7.5 billion for the 504 program — the same as his last two budget proposals. There is no money for the Small Business Investment Company [SBIC] debenture program, and the president has recommended the same program level of $3 billion for the last six years. Last year, nearly 100,000 businesses received 7[a] loans -- a $14 billion investment in the economy, which created or retained over 624,000 jobs. Nearly 200,000 jobs were created or retained from the 504 loan program, which lent nearly 11,000 small businesses more than $6 billion in loans. The SBIC program helped create or retain almost 63,000 jobs in 2007.

* Eliminates all funding for the Microloan Program and Microloan Technical Assistance. This year’s proposed budget increases the program level for the microloan program from $21 million to $25 million, but doesn’t fund it. It continues shifting the cost to the lenders. This is the second consecutive year that the president has made this proposal; for the previous three consecutive years, he sought to eliminate the SBA’s microloan program altogether. Microloans proportionately help more women and minorities than other programs. The proposal also eliminates the counseling assistance program, Microloan Technical Assistance, which is essential to help microentrepreneurs succeed and repay their loans. Last year, 2,437 small businesses received more than $31 million in microloans nationwide.

* Eliminates low-income capital program. President Bush requested no new funding for the New Markets Venture Capital program.

* Cuts funding for key counseling programs. The President's budget proposal makes significant cuts to grants for Small Business Development Centers and Women's Business Centers, reducing their proposed budgets by $10 million and more than $1 million, respectively. Over the last seven years, SBDCs and WBCs have essentially been flat-funded, which equals real cuts for these centers due to their funding level not keeping up with inflation. In addition, with the elimination of the Microloan Technical Assistance program, the president proposes that SBDCs and WBCs would pick up the slack, despite already reduced funding. Last year, SBDCs assisted 600,665 businesses, and WBCs assisted 147,000 businesses. The Program for Investment in Micro-entrepreneurs [PRIME], which provides counseling to low-income entrepreneurs, has also been eliminated.

* Provides no new funding for Procurement Center Representatives [PCRs]. The proposed budget provides no new funding to hire additional PCRs. Currently there are about 57 PCRs -- although only around 30 have full-time PCR duties -- to monitor contract bundling and breakout contracts for small firms. This falls far short of the 100 PCRs that Congress has been calling for to oversee nearly $400 billion in federal contracts.

* Cuts funding for critical assistance programs, and eliminates line-item transparency. President Bush continues to propose cuts to funding for the 7[j], HUBZone and Native American outreach programs, as well as roll the funding into the overall agency operating budget. This reduces transparency and creates uncertainty as to how much funding the programs will receive.

GoodBiz113's take: While President Bush has repeatedly declared his support of small businesses -- most notably, during annual press conferences kicking off April's National Small Business Week -- his actions don't support his spirited words. America's 27 million small businesses are fortunate to have Sen. Kerry advocating for us in a bipartisan manner, and for holding the Bush administration accountable for the deleterious ramifications of its truly unfortunate funding choices.

SOURCES: U.S. Senate Committee on Small Business and Entrepreneurship, 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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Senate Passes First Funding Increase for Small-Business Programs in Seven Years

Today, Sen. John Kerry [D-Mass.] applauded the Senate’s passage of the Consolidated Appropriations Act of 2008, which provides more than $40 million in additional funding for key Small Business Administration [SBA] programs over last year’s funding. Each of the SBA’s core programs -- including Small Business Development Centers, Women’s Business Centers, and the Microloan program -- will receive an increase.

"For the first time since President Bush took office, small business programs will receive a real funding increase thanks to the Democratic leadership of this Congress," said Kerry, chairman of the Committee on Small Business and Entrepreneurship.

"Small businesses are the economic engine of America and create two thirds of all jobs, but the Bush administration has merely used them as photo ops and backdrops to promote big-business policies," Kerry noted. "Democrats have made clear our commitment to fostering innovation and entrepreneurship, and to solidifying America’s future competitive edge by investing in small-business programs."

The 2008 Consolidated Appropriations Act provides almost $569 million in funding for SBA programs. When funding for the disaster loan program and non-agency spending is excluded because it fluctuates each year, the SBA’s funding is increased by more than $40 million over the 2007 funding levels.

Specifically, the SBA’s core programs will receive:

* Small Business Development Centers: Up 9 percent [from $89 million to $97.1 million]
* Women’s Business Centers: Up 4 percent [from $12.5 million to $13 million]
* Microloan Technical Assistance Grants: Up 15 percent [from $13 million to $15 million]
* Microloans: Up 53 percent [from $1.3 million to $2 million in funds to leverage almost $20 million in loans -- up from $12.7 million last year]
* Program for Investment in Microentrepreneurs: Up 50 percent [from $2 million to $3 million]
* 7[j] Management and Technical Assistance Program: Up 53 percent [from $1.5 million to $2.3 million]
* HUBZone Program: Up 5 percent [from $2 million to $2.1 million]
* Surety Bond Guarantee Program: Up 6 percent [from $2.8 million to $3 million]
* Loans and Venture Capital: The SBA will be able to leverage up to $28 billion in loans and venture capital deals through the 7[a], 504, and Small Business Investment Company [SBIC] programs.

SOURCE: 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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Kerry Focuses on Expanding Minority Entrepreneurship Opportunities

Today, Sen. John Kerry [D-Mass.] urged the Bush Administration to take steps to expand access to capital and federal contracts for minority entrepreneurs.

Kerry, chairman of the Committee on Small Business and Entrepreneurship, chaired a hearing to highlight the barriers many minorities face as they seek to start or expand a business, and to discuss policy solutions to address these challenges. “One of our nation’s greatest assets is our diversity," he said. "Investing in minority businesses only helps to increase the value of that asset.

“For example, in Massachusetts, minorities make up about 15 percent of our population, but they own only about five percent of the businesses and account for just 1.4 percent of sales. We must do more to create opportunities for successful business growth, and remove the barriers for minority entrepreneurs.”

Over the last 10 years, minority business enterprises accounted for over 50 percent of the two million new businesses started in the United States, crossing every industrial sector -- from financial services and health care, to construction and transportation. Today, there are more than four million minority-owned companies in the country, with annual sales totaling $694 billion. There are nearly 50,000 minority-owned firms in Massachusetts.

According to the 2002 U.S. Census data, minorities make up 32 percent of our population, yet minority business ownership is only at 18 percent. In addition, these firms make significantly less than their non-minority counterparts. The average gross receipts of minority firms was $162,000 -- considerably lower than the $448,000 average gross receipts of non-minority firms.

This disparity demonstrates the need for targeted programs at the federal level for minority entrepreneurs. Kerry is working on several pieces of legislation to help close the gap for minority firms. At today’s hearing, he promised to introduce bipartisan legislation this summer to improve the federal contracting process for small firms and increase oversight of federal agencies.

The Minority Entrepreneurship Development Act of 2007, which Kerry introduced in January and is cosponsored by Sens. Mary Landrieu [D-La.], Hillary Clinton [D-N.Y.], and Ben Cardin [D-Md.], would give grants to historically Black colleges and universities, Hispanic-serving institutions, and tribal colleges to help train the entrepreneurs of the future. This legislation passed the Committee with bipartisan support last year.

Kerry’s access to capital bill, S. 1256, the Small Business Lending Reauthorization and Improvements Act of 2007, would improve all of the Small Business Administration’s loan programs -- including strengthening the microloan program, which, proportionally, serves more minorities than other programs. The bill would also create an Office of Minority Small Business Development within the agency -- a provision the Committee unanimously passed last year. This bill passed the Committee on May 16, 2007.

GoodBiz113's take: As our nation's cultural melting pot grows, it simply makes sense to have programs in place to help share the wealth. Thanks to Sen. Kerry's ongoing collaborative efforts, that'll happen for win-win-win good.

Sources: Library of Congress, U.S. Census Bureau, U.S. Senate Committee on Small Business and Entrepreneurship
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Before Spring Recess, U.S. Senate Committee Takes Bold, Bipartisan Steps on Behalf of Small Businesses

Before adjourning last Friday for a one-week spring vacation, the U.S. Senate Committee on Small Business and Entrepreneurship had taken bold, bipartisan steps to help small-business owners grow and, in some cases, recover their enterprises.

Kerry, Snowe Add Nearly $100 Million to SBA Budget
On March 23, Senators John Kerry [D-Mass.] and Olympia J. Snowe [R-Maine] -- the committee's chairman and ranking member, respectively -- secured $97 million above President Bush’s FY 2008 budget request for the Small Business Administration [SBA].

The Kerry-Snowe amendment to the Congressional Budget Resolution, cosponsored by Senators Joe Lieberman [I-D-Conn.], Mike Enzi [R-Wyo.], Maria Cantwell [D-Wash.], and Mark Pryor [D-Ark.], unanimously passed the Senate. Representing a 21% increase over the Administration’s proposal of $464 million, the amendment increases funding for:
* Veterans Programs to $2 million [from $743,000 in President Bush’s budget request];
* 7[j] Technical Assistance Program to $3 million [from $1.5 million];
* Small Business Development Centers to $110 million [from $87 million];
* SCORE Program to $7 million [from $4.95 million];
* Women’s Business Centers to $16.5 million [from $11.9 million];
* Native American Outreach to $2 million [from $772,000];
* U.S. Export Assistance Centers to $7 million [from $5.2 million];
* Microloan Technical Assistance to $20 million [the President’s budget proposal sought to eliminate this program];
* Microloans to $3.2 million [from zero];
* Program for the Investment in Microentrepreneurs to $5 million [the President’s budget proposal sought to eliminate this program];
* Hiring 100 Procurement Center Representatives [oversee federal contracting] to $10 million [from $900,000];
* New Markets Venture Capital to $5 million [from zero];
* New Markets Technical Assistance to $5 million [from zero];
* HUBZones to $10 million [from $2 million]; and
* Small Business Innovation Research [SBIR] outreach programs to $6 million [from zero]

“Small-business programs have been on a starvation diet for too many years and we’re trying to reverse that,” said Kerry. “I am pleased to have worked across the aisle with Sen. Snowe to restore funding to small-business programs that are critical to helping America’s entrepreneurs succeed. Our amendment demonstrates our commitment to expanding business opportunities in all sectors of our society -- especially for minorities, women and veterans.”

“In Maine and across this country, small businesses are the backbone of our economy," Snowe noted. "Working together with my good friend Sen. Kerry, we have shaped a bipartisan measure that specifically strengthens the ability of minority, women, and veteran-owned small businesses to compete, succeed and create jobs for our families and future generations of Americans."

Bill to Overhaul Disaster Loan Program Clears Committee
In 2005, in the aftermath of hurricanes Katrina and Rita, the government's Disaster Loan Program was mismanaged and ineffective. Although some improvements have been made to the program over the last six months, the Administration requires additional tools to be able to swiftly and effectively respond in the aftermath of a disaster.

Last Thursday, the comprehensive legislation -- sponsored by Senators Kerry, Snowe, Mary Landrieu [D-La.], and David Vitter [R-La.] -- that passed Kerry's committee will improve the government’s loan program and ensure disaster victims receive timely assistance.

“Hurricanes Katrina and Rita impacted 125,000 small and medium-sized businesses Gulfwide, and in Louisiana alone, more than 18,000 businesses were totally destroyed," said Landrieu. "The federal government has an important role in helping businesses get back on their feet. This bill provides significant reforms to ensure that SBA is better prepared to deal with future disasters, be they natural or manmade."

Her Louisiana colleague agreed. “Small businesses are the backbone of Louisiana’s economy, and this legislation provides critical improvements in the SBA’s ability to provide timely assistance,” Vitter noted. “Specifically, I believe the Private Disaster Loan program, which allows banks to make SBA-guaranteed loans directly to victims, is needed to streamline the recovery process and quickly get our small businesses back on their feet.”

According to the U.S. Chamber of Commerce, over 125,000 businesses were disrupted by hurricanes Katrina and Rita in 2005. In Louisiana alone, more than 81,000 small businesses were damaged or economically impacted, with 18,000 businesses catastrophically destroyed by the storms.

For example, in St. Bernard Parish, one of the Louisiana parishes hardest-hit by Hurricane Katrina, only 370 businesses have reopened – far below the total of 1,400 businesses in operation there before Katrina. In addition, according to state statistics, only 38% of the pre-Katrina population has returned to the parish.

The House Small Business Committee passed legislation earlier last month to improve the Disaster Loan Program. Now, both bills are headed to consideration by the full Senate and House.

Kerry-Hagel Amendment Improves Reservist Loan Program in Supplemental Bill
The U.S. Senate unanimously adopted an amendment authored by Kerry and Sen. Chuck Hagel [R-Neb.] that will improve a loan program for reservists who face economic hardship after a deployment. Included in the emergency supplemental appropriations bill, which cleared the Senate last Thursday, the measure gives reservists up to one year to apply for a Military Reservist Economic Injury Disaster Loan after they return from active duty and allows reservists to apply for low-interest loans before they are deployed.

"We shouldn’t just say thank-you to the men and women who fought to protect this country; we should show them we’re grateful and help them get back on their feet,” said Kerry. “This provision is a key step towards addressing the financial sacrifice being made by many reservists and their families, and the economic struggle they face when they return home.”

"The men and women of our armed forces perform the ultimate job of protecting this country," said Hagel. "It is our obligation to provide these men and women with ample opportunities when seeking civilian employment. This provision would improve opportunities for reservists to establish and maintain successful small businesses."

The Kerry-Hagel amendment:
* Extends from 90 days to one year from the date of discharge the deadline for a reservist-dependent small business to apply for a loan;
* Directs the SBA to create a pre-consideration process for reservist-dependent small businesses, so that they can receive loans immediately upon the reservist being called to active duty;
* Establishes a coordinated, proactive marketing plan to be conducted by the SBA, the Veterans Administration and the Department of Defense to more effectively get information in the hands of reservists and their families; and
* Requires the SBA to report back to the Small Business Committees of the Senate and the House of Representatives on the status of this program, as well as additional steps that may be taken to improve it.

Since 2002, fewer than 300 loans have been made through this program to reservist-dependent businesses, despite increasing numbers of reservists being deployed. The Kerry-Hagel amendment is also a provision in legislation they introduced last Wednesday to expand veteran and reservist entrepreneurship.

The Military Reservist and Veteran Small Business Reauthorization Act [S. 1005] would expand loan programs for veterans and reservists, and create a grant program for reservist-dependent firms that are unable to take on additional debt contingent upon the business providing a viable business plan. For more information on S. 1005, please visit: http://sbc.senate.gov/record.cfm?id\u003d271489.
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