STATEMENT
of the
Honorable Nydia M. Velázquez, Chair
House Committee on Small Business
Legislative Hearing on Disaster and Access to Capital
March 8, 2007
I am pleased to call this hearing to order.
First, I want to thank each of you for being here today.
This morning’s hearing will discuss two very important but different roles the Small Business Administration (SBA) plays—access to capital and disaster assistance. This committee has held two hearings on these topics, and today we will review legislation that attempts to address many of the issues brought up during those discussions.
The disaster loan program was created for the purpose of providing financial assistance to entrepreneurs. However, as most of you recall, Hurricane Katrina tested this initiative and uncovered many problems. After the storm, the affected small businesses were bogged down with paperwork and substantial delays in receiving much needed aid. There is no question that this can never happen again – and that our small businesses deserve better.
For the SBA to adequately assist entrepreneurs they must have a disaster plan in place. Processes need to be stream-lined and tools should be available to provide relief in a faster, more efficient manner. We also need to move away from the current one size fits all approach and broaden the types of aid for small businesses. This includes using vehicles such as bridge loans and grants to respond to the diverse needs of these firms. The disaster relief legislation being reviewed today, the RECOVER Act of 2007, does just that.
Clearly, small businesses do not just need capital following a disaster, they need it each and every day to start and expand their ventures. The SBA’s loan programs, while valuable, could be doing so much more.
They were first developed to provide long-term financing. For these initiatives to live up to their original intent, we need to make them more affordable and accessible for small businesses owners.
The Small Business Lending Improvements Act of 2007, introduced by Ms. Bean and Mr. Chabot, will reduce the financial and regulatory burden placed on small businesses. Most importantly, it will make loans more economical while providing long term stability.
H.R. 1332 will accomplish a number of important public policy goals. This legislation provides incentives for medical professionals to locate to low income areas and establishes a rural lender program to attract small lenders back into the program. Also, veterans returning from Iraq and Afghanistan will be able to secure funds to start or expand their firms should they chose to do so. After all they have done for our country, this is the least we can do for them.
This bill touches all aspects of the SBA’s lending initiatives, including 504. One thing about this program that has always stood out are the ties between local CDC’s and the community. The Small Business Lending Improvements Act of 2007 strengthens these ties by making much needed, and long-overdue, changes. It also keeps the initiative affordable by enabling CDC’s to improve the liquidation process, allowing fees to remain reasonable.
Today’s hearing will provide Members with an opportunity to provide input and fine tune these proposals in preparation for next week’s mark-up.
This country’s 26 million small businesses must have the ability to secure affordable capital in order to continue spurring economic development and job creation. It is not only important that they are able to start their businesses, but if affected by a disaster such as Katrina, entrepreneurs must be able to receive reliable and efficient aid. I believe the legislation being reviewed today strengthens both the disaster and access to capital programs, giving small businesses the tools they need to be competitive and successful.
I look forward to hearing the witnesses’ testimony.
Thank you.
