WASHINGTON — Though the House overwhelmingly passed the Small Business Lending Improvements Act of 2007 (H.R. 1332), it is just one piece of a larger Small Business Administration reauthorization plan and reports are unclear whether the Senate is on the same page.
The bill, which passed the House 380-45, would help lower the cost to borrowers to secure business loans through the SBA. H.R. 1332 would direct the SBA administrator to establish a rural lending outreach program and a community express program for loans of $250,000 or less; provide special considerations for medical professionals looking to start their practices in Designated Shortage Areas; increase veteran participation; revise eligibility requirements for development company designation as a certified development company and require certain CDCs to contract for the foreclosure and liquidation of defaulted small business loans; and authorize SBA loans for projects which reduce energy consumption by at least 10%.
The Small Business Lending Improvements Act is going to infuse our small businesses with the capital they need to start and grow successful ventures," Small Business Committee Chair Nydia Vel?zquez, who also co-sponsored the bill, said. "Small businesses have had to pay increasing costs to access what was intended to be affordable financing for far too long now. Today, with this bipartisan effort, entrepreneurs will see some relief."
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The bill is part of the Democrats "Innovation Agenda," designed to promote "development of a best-in-class workforce and utilization of available technology to find and exploit emerging market opportunities," the bill's sponsor, Melissa Bean (D-Ill.), said. "I'm particularly proud that this agenda includes my legislation to improve access to capital for small businesses, which are the driving forces of innovative ideas, new product development, and economic growth." Actors Federal Credit Union CEO Jeff Rodman testified on behalf of CUNA in support of the bill at a March 8 hearing. Rodman told the committee that under the SBA 7(a) zero-subsidy policy over the past six years, fees have been prohibitive to borrowers and, while Actors FCU offers business lending, it is not an SBA lender because of the daunting application process. Republicans put the zero-subsidy in place to avoid shut downs that have occurred in the past due to delayed congressional appropriations.
Committee Ranking Member Steve Chabot (R-Ohio), who is also a co-sponsor to the bill, would like to lower fees without re-instituting appropriations.
NAFCU had also submitted a letter for the record supporting the bill. Upon the House passage, NAFCU Director of Legislative Affairs Brad Thaler explained, "Instead of moving one large SBA bill, the House is moving SBA reauthorization in a series of bills. We were pleased to see that bill go forward. It could stand to benefit credit unions." He added that he was optimistic that through the SBA reauthorization process, Congress will turn to H.R. 1849, the Credit Union Small Business Lending Act. That legislation would exempt the unsecured portion of an SBA loan through a credit union from the 12.25% cap; the secured part is already exempt. It would establish a credit union outreach program within SBA, provide a guarantee of up to 85% on business loans up to $250,000 for members who reside in underserved areas, and clarify that credit unions are eligible to participate in the SBA's 504 loan program.
The banking groups are also supporting the general SBA reauthorization bill, H.R. 1332, according to a committee statement.
Thaler said he was unsure of how the Senate would proceed with the legislation, whether in small bites like the House or with one larger bill. Either way, he said he expects there to be a conference between the House and Senate to iron out their differences.
According to a report by BankNet 360, lawmakers are moving closer to an agreement on the legislation. Senator John Kerry (D-Mass.), who chairs the Senate Small Business & Entrepreneurship Committee, was scheduled to host a roundtable meeting around press time, after which very similar bipartisan legislation was expected to be introduced a committee spokesperson told BankNet 360. One of the differences anticipated is higher maximums for the 7(a) and 504 loans. –[email protected]
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