Washington, DC – A key Congressional panel Thursday explored new proposals for improving small businesses’ ability to access capital. Rep. Kurt Schrader (D-OR), the chairman of the House Small Business Committee’s Subcommittee on Finance and Tax, said that access to capital remains the fundamental challenge facing small firms as they struggle to respond to the recession.
“From high-tech start-ups to Main Street mom-and-pop restaurants, small businesses everywhere cannot find the credit they need to survive, retain employees and grow their businesses,” said Schrader.
“As a small business owner myself I understand that our priority needs to be continuing to find ways to get affordable credit into the hands of entrepreneurs, so they can spur job growth.”
Thursday’s hearing was the next step as the Small Business Committee works to develop legislation that will get capital flowing to entrepreneurs. The measures under consideration would strengthen and improve the Small Business Administration’s (SBA) various capital access programs, so that the initiatives better meet small businesses’ needs.
Members of the Committee reviewed several proposals, including streamlining the 7(a) initiative, expanding access to microloans and addressing ongoing problems in the SBA’s disaster loan program.
These ideas are designed to build on items contained in the American Recovery and Reinvestment Act (ARRA), which have already helped to improve the pace of lending. However, even with the Recovery Act, lawmakers noted that the pace of lending remains far from where it needs to be, making additional Congressional necessary.
“If we are going to rebuild our economy for the long term, we need to put more options on the table for small businesses to access capital,” Schrader said. “Entrepreneurs today cannot find lenders, but when they do, the terms for loans are often too expensive.”
Schrader noted that the SBA’s lending initiatives are most needed during economic downturns, when private capital markets fail to provide small businesses the financing options they need. However, for a wide range of reasons, the SBA’s capital access programs have not performed this vital function during the current economic crisis.
“In previous downturns, when credit dried up, the Small Business Administration’s lending programs filled in the gaps, promoting lending and providing firms the capital to drive the economy back toward prosperity,” Schrader said.
“Unfortunately, in this recession, the SBA’s capital access programs have been unable to fill their traditional role, leaving many small businesses with few financing options. Bolstering the SBA’s lending initiatives will get credit flowing again to small firms.”
The SBA’s capital access programs have not been updated in ten years. While the proposals discussed have not yet been introduced as formal legislation, Members of the Committee are expected to introduce the measures shortly, after which they would be considered in a Subcommittee mark-up.
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