WASHINGTON, D.C. - U.S. Sen. Sherrod Brown (D-OH) today announced the introduction of the Small Business Emergency Loan Relief Act.
"Small businesses make up the backbone of our economy, and small businesses will lead us out of this recession," Brown said. "This bill is about unfreezing the credit market so that more small businesses have the capital to expand and hire more workers. The strength of the Ohio's small business community is critical to rebuilding our middle class."
Brown's legislation temporarily raises the maximum loan amounts for the three main Small Business Administration (SBA) loan products: the 7(a) loan, the 504 loans, and the America's Recovery Capital (ARC) Loan Program. The 7(a) loan is SBA's main guarantee program, which authorizes loans made by SBA partners (banks and other financial institutions) and guaranteed by the SBA. The 504 loan program uses nonprofit Community Development Corporations (CDCs) to provide long-term fixed-rate loans for assets such as land, structures, and equipment that promote local economic development. The ARC loan program, which was created through the American Recovery and Reinvestment Act of 2009 (ARRA), provides advances of up to $35,000, made by commercial lenders, to small businesses to make loan payments for up to six months.
The Small Business Emergency Loan Relief Act raises the 7(a) loan size from $2 million to $5 million, the 504 loan size from $1.5 million to $4 million, and the ARC loan size from $35,000 to $50,000. The bill also temporarily allows customers to use the 504 loan guarantees to refinance existing business debt, which would help small businesses address cash flow issues.
The legislation builds upon the success of SBA lending through the American Recovery and Reinvestment Act of 2009 (ARRA). ARRA provided $730 million to the SBA to help unlock the small business lending market. As of Oct. 9, SBA has supported $12.6 billion in small business lending. The recovery package has also resulted in more lenders originating loans. Since ARRA's enactment on Feb. 17, 2009 to the end of last month, more than 1,260 lenders that had not made a loan since Oct. 2008 have now made an SBA loan.
Brown has been working to connect Ohio small businesses with resources passed through the economic recovery package. Earlier this year, Brown held a series of forums connecting more than 1,000 Ohio small businesses with federal officials from the SBA. More than 2150 loans totaling more than $375 million have been granted to Ohio small businesses in the past year, with 1,247 granted in April 1 - Sep. 30 2009 (the six months following the time at which SBA loan provisions in the economic recovery package took effect). The 523 loans granted through SBA's Cleveland District Office (which covers Northern Ohio) represents a 53 percent increase over the previous six months while the 724 loans in the Columbus District Office (which covers Southern Ohio) represents a 29 percent increase. Since the passage of the ARC loan program in the economic recovery package, more than 150 loans have been issued in Ohio - ranking the state sixth in the nation for number of loans issued.
Brown has been examining the effects of the credit crisis on small businesses and manufacturers through his chairmanship of the U.S. Senate Banking Subcommittee on Economic Policy. On Oct. 9, he convened a hearing entitled "Restoring Credit to Manufacturers," which featured expert testimony from the manufacturing and banking sectors to investigate ways to reverse the credit crisis.
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