Subcommittee Advances Small Business Lending Bills
Last week a House small business subcommittee on finance and tax approved eight bills that aim to update and improve small business lending programs. The legislation, which was also the topic of a full committee hearing on Wednesday, includes the Small Business Microlending Expansion Act and the Small Business Early Stage Investment Act, which would provide funding to young businesses in targeted industries and an additional $110 million to very small start-ups.
“Traditionally, small businesses lead our country out of economic downturns by expanding and creating new jobs,” said Rep. Kurt Schrader (D-Oregon), the subcommittee’s chairman. “However, small businesses can’t play that role if they don’t have access to affordable credit. The legislation passed today will mean more loans for more businesses at more affordable rates.”
During the full committee hearing, Rep. Nydia Velazquez of New York, noted that a summer survey conducted by the Federal Reserve found that 35% of domestic banks have tightened small business lending. SBA lending is down as well.
The proposed legislation “helps firms secure financing for new purchases. It also raises SBA loan guarantees, reducing risk for lenders. That’s critical because some banks are saying they won’t loosen lending standards until the middle of 2010—and that’s at the earliest,” said Velazquez, who chairs the committee.
After the hearing, New York Rep. Yvette Clarke said that she and Velazquez have discussed arranging what she called an “eye-to-eye” between SBA and financial institutions.
“We’re going to ask, ‘Are you going to open up and make things happen for small business or do we have to do something demonstrative in terms of legislation?’ I think that’s the point where we are right now,” said Clarke.