United States of America: Expanded loan program for small businesses
Description
Legislation that was under consideration in the 111th Congress (2009-2010) would have substantially increased the value of subsidized or guaranteed loans that are made available to small businesses in the United States. Existing U.S. law is discriminatory both in principle[1] and in detail.[2]
The House of Representatives approved by a vote of 389-32 on October 29, 2009 the “Small Business Financing and Investment Act of 2009” (designated as H.R.3854). The bill would amend the Small Business Act and the Small Business Investment Act of 1958 to revise or add numerous provisions that affect lending to small businesses. These include such provisions as a capital backstop program, increased resources for the certified development company economic development loan program, an increase in the loan limits under the Small Business Administration’s microloan program, and expansion of the small business investment company program. For the main lending program for small businesses, the bill would increase the maximum gross size of from the current level of $2 million to $3 million.
No overall estimate of the cost of the bill is available because it was approved in the House before the Congressional Budget Office could “score” its fiscal effects.
The bill has been referred to the Senate Committee on Small Business and Entrepreneurship, which is developing its own version of the legislation. On December 10, 2009 Committee Chair Mary Landrieu (Democrat-Louisiana) and Ranking Member Olympia J. Snowe (Republican-Maine) introduced the “Small Business Job Creation and Access to Capital Act of 2009” (S.2869). Their bill would increase the small business loan limit to as high as $5.5 million and extend for a year the fee eliminations and increased guarantee set to expire under the American Recovery and Reinvestment Act (i.e., the stimulus bill enacted at the start of the Obama administration). The bill would increase the loan limits on various types of SBA loans from current levels that range .In the case of microloans, for example, the limits would be increased from $35,000 to $50,000, and the maximum loan made to a microloan intermediary would be increased from $3.5 million to $5 million. Limits on other types of loans would variously be increased from $2 million to $5 million, and from $1.5 million to $5.5 million. The Small Business and Entrepreneurship Committee unanimously approved this bill on December 17, 2009, and also approved the “Small Business Export Enhancement and International Trade Act” (S.2862). The latter bill expands the administrative resources within SBA dedicated to helping small businesses explore new export opportunities in emerging markets or expand their current export business.
Both Senate bills were then placed on the legislative calendar, but neither was voted upon before the adjournment of the 111th Congress (2009-2010).
The stimulus bill had provided $375 million to increase the guarantee on small business loans and eliminate the fees charged to borrowers. This funding supported $16.5 billion in lending to more than 40,000 small businesses, according to a release issued by senators Landrieu and Snowe, with borrowers reporting that these loans would save or create more than 450,000 jobs. The money is now almost completely spent.
[1] The statement of policy (section 102) for the Small Business Act and the Small Business Investment Act of 1958 states in part that, “It is the intention of the Congress that in the award of financial assistance under this Act, when practicable, priority be accorded to small business concerns which lease or purchase equipment and supplies which are produced in the United States and that small business concerns receiving such assistance be encouraged to continue to lease or purchase such equipment and supplies.”
[2] Section 501(e)(6) of the Small Business Act and the Small Business Investment Act of 1958 defines the term “small manufacturer” (and hence a firm that is eligible for certain benefits) to mean a small business concern for which “all of the production facilities of which are located in the United States.”
Any Evidence-Based Deliberation:
| Question | Result |
|---|---|
| Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations? | Yes |
| Is there any evidence that alternatives to the proposed measure were considered? | No |
| Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government? | No |
| Was such evidence identified? | No |
| Is such evidence publicly available? | No |
| Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives? | No |
| Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken? | No |
| Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory? | No |
| Did the government state its intention to review the measure within one year of implementation? | No |
Date Discovered:
Implemented: No
Date of inception:
GTA Evaluation: Amber
Source:
See the items hyperlined in the description of the measure.
Government Response:
- 561 reads
