Senate Hearing Addresses Small Business Financing
PDE staff were on hand earlier this week for a hearing of the Senate Small Business and Entrepreneurship Committee. Our report of the hearing--Small Busniess Financing: Progress Report on Recovery Act Implementation and Alternative Sources of Financing--follows:
In her first appearance before the U.S. Senate Committee on Small Business and Entrepreneurship, Small Business Agency Administrator Karen Mills said the funding received by SBA through the Recovery Act is already beginning to make waves in the economy.
Of the $730 million appropriated, $375 million has been directed toward temporarily eliminating fees on the 504 and 7(a) loans and increasing the guarantee on SBA loans to 90 percent. Overall, more than 100,000 loans have been approved by SBA since the Act’s passage, representing $3 billion in loans to small businesses.
In spite of this, Committee Chair Sen. Mary Landrieu, D-La, said she continues to be concerned about the plight of American small businesses.
“While only five percent of small businesses recently reported that they use SBA financing, the agency makes up the largest single source of long-term capital in this country,” she said. “We must find ways to get more SBA financing in the hands of small businesses and focus on making sure alternative sources of financing are available to America’s entrepreneurs on fair terms.”
Mills said SBA is doing several things to this end, including outreach to small business organizations, in the hopes of spreading word through these existing networks of their new loan and program availability. In particular, they are promoting the many government contracts available to small businesses. Soon, these opportunities will also be listed on the agency’s Web site. The committee will discuss these contracts in a hearing next week.
Additionally, SBA has temporarily changed the standards on its 71 program to match those of the 405 program, which will make an additional 75,000 small businesses eligible for loans.
Sen. Carl Levin, D-Mich., was pleased to hear this news, noting that it will aid ailing automobile dealerships. Levin also asked about ways SBA is working with the Treasury Department, to make sure banks are lending the TARP funding they have received.
Mills said she has been actively working with Treasury to increase this liquidity, and that she will submit specific examples of this work to the official record.
As for the money that has already been loaned, Mills said she is pleased with the diversity of recipients—22 percent have been minority-owned businesses, 19 percent women-owned businesses, 9 percent businesses owned by veterans and 20 percent rural businesses.
[Reported by Paige Ingram]