WASHINGTON, D.C. -U.S. Sen. Sherrod Brown (D-OH) visited Omega Automation in Dayton on Thursday to highlight how small business lending provisions in the Recovery Act have helped small businesses expand operations and hire new workers. Brown is fighting to pass the Small Business Jobs Act when the Senate reconvenes in September. This bill would extend small business lending programs like the 7(a) program, which provided a $1.5 million Small Business Administration (SBA)-backed loan that enabled Omega Automation to save 18 jobs and hire 8 more. Omega is looking to further expand its operations in the coming months.
"Small, family-owned businesses - like Omega Automation, Inc. - will drive our economic recovery," Brown said. "We're working to break the filibuster of the Small Business Jobs Act so that more small businesses - which create nearly two-thirds of new jobs - can once again access the credit they need. The Recovery Act helped unfreeze the credit market for small business owners like Alan King. In return, he's hired workers and is able to produce Ohio products which we can sell around the world."
"It's essential that small businesses like Omega Automation have access to adequate capital to survive and grow in the present environment," Dr. Alan King, owner of Omega Automation, Inc. said. "We were able to refinance this business only because we put together three participants: a willing bank in Farmers State Bank; a government program that actually works like the SBA 7(a); and Senator Sherrod Brown, who actually cares enough about small businesses and jobs to work with companies and their banks to work through all of the red tape to get the SBA approval. Our heartfelt thanks to all of them from our 18 employees whose jobs were saved, our 8 additional rehires, and the 6 more we intend to hire in the next two months."
Passing the Small Business Jobs Act is a top priority of Brown and Senate Democrats. While it has been pending in the Senate since June 18, it has been filibustered and blocked by its opponents. Endorsed by the Chamber of Commerce and National Federal of Independent Businesses (NFIB), the Small Business Jobs Act would create a $30 billion loan fund - at no cost to taxpayers - to enable community banks to make loans to small businesses seeking to expand operations or hire new workers.
Omega Automation was awarded $1.5 million through the 7(a) program - which helps start-up and existing small businesses obtain financing when they might otherwise be denied credit from most banks. The company used its loan to consolidate their operations into a larger space and hire additional workers. Through the 7(a) loan, Omega Automation, a family-owned manufacturer providing special production equipment to the automotive, appliance, electronic and commercial industries, has hired 8 new employees and intends to hire 6 more in the coming months.
Small business lending is critical to our economic recovery. Small Business Administration (SBA) loans through the Recovery Act have supported more than $26 billion in small business lending, which has helped to create or retain 650,000 jobs. The Small Business Jobs Act would help small business owners access more private capital to finance an expansion and hire new workers. Click here for a summary of the bill's provisions.
Brown is fighting for a provision that would raise SBA loan limits and eliminate certain fees, which is based in part on his Small Business Emergency Loan Relief Act. Because many Ohio small businesses are in the manufacturing industry, they require higher loan limits due to higher capital costs in the industry. Brown's provision would increase the caps on some of the most popular SBA loan programs - it increases 7(a) loan limits from $2 million to $5 million, 504 loans from $1.5 million to $5.5 million, and microloans from $35,000 to $50,000. It also increases the government guarantee on 7(a) loan limits, while providing the elimination of borrower fees on 7(a) and 504 loans through December 31, 2010. The provision also increases the 7(a) Express Loans from $300,000 to $1 million to increase working capital to small businesses. The provision also includes the Intermediary Lending Pilot program, which allows the SBA to make direct loans to eligible nonprofit lending intermediaries which then can lead to new or growing small businesses. SBA has estimated that the loan increase would expand lending to small businesses by $5 billion in the first year.
The Recovery Act included provisions which made SBA loans more attractive to both borrowers and lenders. Congressional efforts to renew these provisions stalled and SBA lending declined steeply in June. To illustrate this and the need to provide additional support for small business lending, Brown released data on the number of loans provided to small businesses through the SBA's popular 504 loan program. From March 29 to June 13 2010, the SBA approved an average of 4.7 loans per week. From June 21 to July 18 2010, that number plummeted to an average of 0.2 loans per week. Brown's legislation would expand SBA loans and return lending to the pre-June 2010 activity level, before the Recovery Act provisions expired.
Brown is working to unlock the credit market for small businesses - which create more than 64 percent of new jobs. He has held a series of forums connecting more than 1,000 Ohio small businesses with federal officials from the SBA. Brown was joined in Dayton today by Scot Hardin from the SBA Columbus District Office and Assistant Vice President, The Farmers State Bank Kent Monnin.
Brown's visit to Dayton is part of his "Made in Ohio Tour," which kicked-off earlier this month. With the top priority of creating Ohio jobs, Brown is fighting for a multi-pronged effort to promote economic development. The key components of Senator Brown's jobs strategy are: