U.S. Congressman Dan Boren voted to create new jobs and stimulate the economy by providing small businesses with greater access to loans and investment dollars they need to expand and grow their operations. The Small Business Financing and Investment Act, H.R. 3854, will help open credit markets that have shut-out small business owners during this economic crisis.
“Small businesses are the number one source of new jobs in this country” said Boren. “By helping small businesses grow, we are putting Americans back to work, supporting innovation in our economy, and laying the groundwork for our future prosperity.”
Small businesses create 60-80% of new jobs every year, but the current economic crisis has frozen credit and made it difficult for American small businesses to get the financing they need. By comprehensively updating the Small Business Administration’s capital access programs, the legislation is expected to support $44 billion in lending and investment for smaller firms.
“With this legislation, we are helping small firms find affordable sources of capital, one of the biggest challenges entrepreneurs face in the current economy. By giving small business owners more tools to weather this economic crisis, we will create and save jobs while directing dollars back into our local economies. I am proud to support of a bill that helps us get Americans back to work,” said Boren.
The legislation will increase loan sizes to better meet businesses’ needs. It also includes incentives to encourage local banks to lend to small businesses, and reduces bureaucratic red tape to make it easier for entrepreneurs to secure credit. The bill creates a new public/private partnership to expand investments in small business startups – an important source of job creation. It also extends critical Recovery Act provisions eliminating fees on Small Business Administration loans and guaranteeing up to 90% of 7(a) loans. To foster a diverse mix of businesses, it takes steps to promote veteran-owned, women-owned, and rural small businesses.
The legislation passed the U.S. House of Representatives today by a vote of 389 to 32 and will now head to the U.S. Senate for consideration. Additional details on HR 3854 are provided below.
Updating SBA Lending Programs to Better Meet Businesses’ Needs
· The Small Business Financing and Investment Act reduces paperwork required for SBA loans, making it easier for both small business borrowers and lenders to participate.
· The bill also increases loan sizes, giving businesses access to larger amounts of capital. Conventional loan size will increase by 30% to $3 million; other loan programs will provide as much as $25 million for small manufacturers.
· The legislation establishes a new training program to encourage lender participation, creating more choices for businesses seeking to acquire SBA-guaranteed loans.
Small Business Lending and Natural Disasters
·Because businesses’ recovery is often vital for communities that are trying to come back from natural disasters, the legislation strengthens the SBA’s disaster loan program, providing a one-year deferment on SBA disaster loans. The legislation increases outreach so that after disasters small businesses can better take advantage of SBA’s existing disaster loan programs. H.R. 3854 also creates a new grant program so small firms can receive grants of $100,000 in order to help them recover from disasters.
Small Business Lending for Health Practitioners
· A new program at the SBA will help smaller and solo health practitioners adopt Health Information Technology, improving patient care, reducing health care costs and helping speed the adoption of electronic health records among small practitioners.
Creating Jobs through Small Business Growth
· By providing additional technical assistance and training for individuals taking out microloans, H.R. 3854 will ensure more of these new small businesses succeed. The microloan program is an important source of capital for many dislocated workers looking to launch their own business.
· For small businesses that are “major employers” in an area, the legislation will allow them to secure loans as high as $25 million. This will help small businesses that are significant contributors to local employment access larger amounts of capital.
Building on the Success of the Stimulus
· The American Recovery and Reinvestment Act, which Congress passed and was signed into law in February, temporarily raised the amount that the government can guarantee on SBA-backed loans to 90%. It also eliminated fees that borrowers normally pay on SBA loans.
· H.R. 3854 builds on this by maintaining the higher guarantee, the bill will encourage more financial institutions to loan to small firms. The bill reauthorizes the fee waiver to make loans more affordable for small businesses.
· Under the bill, the application requirements for loans through the America’s Recovery Capital (ARC) program are reduced, so that businesses can secure these emergency, interest-free loans faster.
· H.R. 3854 also raises ARC loan sizes from $35,000 to $50,000, meaning firms can get a larger injection of short-term capital to weather the current downturn.
Delivering Startup Capital to New Ventures
· Businesses are also having difficulty raising equity capital. Beginning in the last quarter of 2008, investments in early-stage businesses plunged 26.4%.
· To address this shortage, the bill establishes a new Early-Stage Investment Program at SBA, which will pair SBA grants with private venture capital in order to target investment dollars to promising small business startups.
· The legislation modernizes the SBA’s New Markets Venture Capital (NMVC) program, which steers investment dollars to businesses in low-income areas — expanding its geographic reach so more businesses around the nation can utilize it.
· The bill targets NMVC resources to small manufacturers in low income areas.
· The legislation makes improvements to the “Renewable Energy Capital Investment” program in order to increase investment in small enterprises that are researching alternative and renewable energy solutions.
Promoting Entrepreneurship for Veterans, Rural America, and Women
· As many of our men and women in uniform return from the conflicts in Iraq and Afghanistan, the bill provides tools to help veterans interested in starting their own businesses. For veterans, the legislation offers higher guarantees and lower cost loans, so they can access more affordable capital.
· With the creation of a Rural Lender Outreach Program, this bill reduces application burdens for small business borrowers and lenders in these regions, increasing the flow of capital to businesses in rural areas. The Rural Lender Outreach Program also increases loan guarantees, encouraging banks to lend to rural entrepreneurs.
· The bill also makes permanent the Community Express program, which promotes lending to small businesses owned by women and economically disadvantaged individuals.