Floor Statement
The Honorable Nydia M. Velázquez
Floor Statement on Funding for 7(a) Loan Program
Debate on Science, State, Justice and Commerce (SSJC)
Appropriations Bill
June 27, 2006
When we talk about targeted policies that
are aimed at improving the economic environment for
small businesses - we are talking about this amendment.
This is a bipartisan measure that has passed the House
for the past two years.
Lowering the cost of the Small Business Administration's
7(a) loan program is a fiscally responsible, common
sense solution that will result in job growth and increased
revenue.
The truth is that the program is simply
too costly for this nation's small businesses. The cost
for start up loans has increased by nearly $1,500 to
$3,000, and for more established small businesses, the
total cost can be as high as $50,000. This is money
our nation's small businesses are paying directly to
the federal government.
As a result, entrepreneurs today are getting
a more expensive loan that is almost 50 percent smaller
than what it was just a few years ago - limiting their
ability to start and expand their ventures.
In fact, recent SBA figures show that the program is
doing $160 million less than it was during the same
time the previous year showing how these rising costs
are having an impact on lending.
This amendment would reverse this effect
- and would lower the cost of the 7(a) loan program.
To compound the problem further, entrepreneurs
are also finding that they have fewer places to go to
access this financing. In fact, the number of lenders
willing to offer 7(a) loans has dropped in half over
the past several years, leaving small firms scrambling
to find vital sources of capital.
Today is an opportunity for us to take
action to help relieve our small businesses of these
burdens.
Fees have been raised 4 times over the
past two years, and are already at their maximum level.
If we were to see a significant increase in interest
rates, experience an economic downturn, or a regional
crisis - like what we saw in the Gulf Coast - this program
would not be able to support itself.
The result would be caps, limits on loan
sizes and even the shutdown of the program altogether.
The adoption of this measure would enable us to avoid
this type of lending crisis in the future.
This amendment is fiscally responsible
and uses offsets from four different salaries and expense
accounts so that no one agency is disproportionately
harmed. In fact, it only takes $10 million from each
agency - which amounts to less than one percent of the
four S & E accounts.
Nearly 20 prominent small business groups
are in support of this amendment - up from 14 last year
- illustrating the demand from our nation's small businesses
for this type of action.
This is a program that is now doing nearly
a half a billion less since the fees were raised. It
is clearly not doing better - and it is certainly not
benefiting this nation's small businesses.
A yes vote is a vote to help this nation's
small businesses move forward as the drivers of our
economy. I strongly urge my colleagues to vote for this
amendment.
I reserve the balance of my time.
