House Small Business Committee Chair presses SBA lending

WASHINGTON D.C.  – The American Recovery and Reinvestment Act of 2009 features provisions intended to jump-start lending to small businesses. Rep. Nydia M. Velázquez, D-N.Y., chairwoman of the House Committee on Small Business, says it’s time to implement those provisions. In a letter to Karen Gordon Mills, the new head of the Small Business Administration (SBA), Velazquez wrote, “It has now been 51 days since the president signed these measures into law. Given the current economic climate, it is critical that these programs get under way.”

In response to Velázquez’s letter, an SBA spokesman said the SBA was moving as quickly as possible to get the programs moving.  Congress had estimated that certain programs would be up and running between 15 and 30 days after President Obama signed the Stimulus Plan of 2009.

The American Recovery and Reinvestment Act of 2009 provides several different options for small businesses. It includes:

    •      Economic Stimulus Lending Program: For 12 months from the date of enactment of the legislation, the amount of a loan that the SBA may guarantee is increased up to 90 percent of a qualifying loan made to an eligible small business.
    •      Secondary Market Guaranty Authority: For two years from the date of enactment of the legislation, the SBA may guarantee pools of first mortgage loans made in conjunction with SBA-guaranteed Community Development Lending Program financing if the pools are to be sold to third-party investors.
    •      Community Development Lending: This section authorizes the SBA to refinance a limited amount of existing debt with SBA-subsidized community development loans if the financed project involves expansion of a small business.
    •      Small Business Investment Company Program Amendments: This section provides that an individual small business investment company may have an outstanding amount of SBA leverage equal to the lesser of $150 million or 300 percent of its private capital, which is an increase from the current limit.
    •      Small Business Stabilization Loan Program: Small businesses experiencing immediate financial hardship and experiencing difficulty repaying an existent SBA-guaranteed loan. These loans would have 100 percent SBA guarantee, have interest fully subsidized and be amortized over five years with the first payment not due until one year after the loan is disbursed.
    •      Secondary Market Loans
    •      Fee reductions

   None these measures have been issued yet. In her letter, Velázquez noted, “Given the unprecedented size and scope of the problems in our credit markets, it is doubtful that these steps alone will be sufficient. For that reason, the SBA must expeditiously implement these provisions as Congress intended and instructed in the Stimulus Act.”