WASHINGTON, D.C. – The U.S. Senate Committee on Small Business and Entrepreneurship today is considering bipartisan legislation (S. 2869) that mirrors an initiative Sherrod Brown (D-OH) introduced this fall. Brown’s Small Business Emergency Relief Act, introduced October 21, would temporarily raise maximum amounts for loans administered by the Small Business Administration (SBA). Earlier this month, during a national address to the nation highlighting the importance of domestic job creation, President Obama called for a proposal to unfreeze the small businesses credit market.
In support of today’s committee mark-up of S. 2869, Brown submitted the following statement for the record:
“While the recession spared no segment of our economy, small businesses have suffered some of the worst effects of the financial crisis and corresponding credit shortage. Without access to capital, small businesses must rely on lines of credit to sustain ordinary operations like making payroll or acquiring necessary equipment.
“In other words, without access to credit, small businesses are at great risk of having to close their doors. Credit means jobs, and loss of credit means lost jobs.
“I heard from one Ohio manufacturer with a strong credit history and a personal relationship with its lender. The bank recently capped his business credit line because a percentage of his business is auto supply components. The company feels penalized despite having a strong track record.
“I heard from the head of a family-owned trucking company who wants to expand her repair shop to meet growing demand. Yet, after she presented solid financials to a number of lenders, no bank was willing to offer an SBA-backed loan.
“These are not isolated incidents. Small business owners from across Ohio have related how difficult it is to secure loans.
“At the start of this year, the situation facing small businesses was particularly bleak. In March, for example, lenders in Ohio made roughly a quarter of SBA guaranteed loans compared to years past.
“The Recovery Act made a number of significant adjustments to SBA programs. Most notably, it eliminated fees and increased the guarantees associated with SBA loan guarantee programs. With these provisions in place, SBA lending in Ohio increased to near normal levels by August.
“Many of the Recovery Act adjustments are set to expire in the coming months. We now have the opportunity to build on the strengths of these provisions and to further encourage small business lending. And it is imperative that we do so, because small businesses are integrally tied to our economic strength and middle class prosperity.
“That is why I recently introduced the Small Business Emergency Loan Relief Act of 2009. That bill would encourage lending by temporarily raising the guarantee limits and eliminating fees on SBA 7(a) and 504 loans and microloans. It would also ease the cash flow burden on healthy businesses by allowing them to refinance existing debt.
“The bill before the committee today contains these same central components that I believe will encourage lending to healthy businesses that, except for lack of credit, can and would be profitable.
“As one Ohio business owner I recently met put it: ‘credit makes this country great.’ That’s because credit links innovation and entrepreneurship to productivity and profits. It fuels economic growth. It will enable the small businesses that drive our economy to muscle through these rough times and reignite our economy.”
Brown is an outspoken advocate in Congress on behalf of Ohio small businesses. In addition to authoring the Small Business Emergency Relief Act, Brown recently urged on the SBA to improve access to credit for small businesses. In a letter to SBA Administrator Karen G. Mills, Brown called for increased loan flexibility and an adjustment of the SBA’s debt refinancing guidelines. Brown, who chairs the Senate Banking Subcommittee on Economic Policy, has held a series of hearings exploring how best to support small businesses and manufacturers in the recession. Most recently, Brown’s hearing “Weathering the Storm: Creating Jobs in the Recession” outlined critical priorities for Congress’ impending jobs package, including improving small businesses’ access to credit. Brown has also connected more than 1,000 Ohio small businesses with federal officials through a series of forums he hosted across the state.