Velazquez Introduces Emergency Bill to Extend Small Business Lending Program
Washington, DC – An important Small Business Administration (SBA) lending program is likely to meet its statutory lending cap in the next few weeks, meaning American entrepreneurs seeking capital to grow their operations will be turned away, costing the U.S. economy significant job growth. Rep. Nydia M. Velázquez (D-NY), the Ranking Democrat of the House Committee on Small Business, introduced legislation (H.R. 3132) today that would raise the cap, allowing the initiative to continue functioning and helping meet small firms’ financing needs.
“Small businesses are the economic engine of our nation, but they require capital to create jobs and fuel commerce,” Velázquez said. “Shutting down or disrupting one of the most important small business financing mechanisms we have at our disposal would be irresponsible and do great harm to our economy.”
The SBA program, referred to as 7(a), guarantees loans made by banks to small businesses. Due to a strengthening economy, more small businesses are seeking SBA credit in 2015. Through July, loan volume is up 20 percent over last year. Agency data suggests the program could approve over 60,000 loans for $21.5 billion. However, the lending cap set in law for Fiscal Year 2015 is $18.75 billion. As a result, it is likely the SBA will run out of loan-making ability as early as July 28th, based on current lending volume.
“It would be inexcusable for Congress to leave out in the cold small firms looking to build a new facility or purchase equipment,” Velázquez noted. “This initiative creates jobs, fuels growth and does not cost the taxpayer a cent. It would be nothing short of legislative malpractice to not extend it through the summer.”
Velázquez’s bill, being introduced today, would raise the cap to $23.5 billion, allowing the initiative to continue functioning until the cap can be addressed again when Congress passes legislation for the start of the new Fiscal Year. Absent action, the agency would have to tell businesses to wait for capital and face a backlog when the cap is addressed in the fall. Estimates suggest shutting the program down, even temporarily, could cost the economy more than 36,000 jobs over just a two-month period.
“If this program goes away, many Main Street businesses will encounter another credit crunch,” Velázquez noted. “That means fewer businesses will hire or purchase goods and services from their vendors, causing real ripple effects across the economy. I call on my colleagues to work together and pass this legislation immediately.”The legislation is supported by the Small Business Administration and the Office of Management and Budget. It is cosponsored by all Democratic Members of the House Small Business Committee.
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