Peters Bill to Increase Small Business Lending Unanimously Passes the Senate
Legislation Ensures Small Business Administration’s Main Lending Program Can Meet Increasing Demand for FY2015
WASHINGTON, DC – U.S. Senator Gary Peters (MI), a member of the Small Business and Entrepreneurship Committee, today announced that the Senate unanimously passed a bipartisan bill he introduced to ensure the Small Business Administration (SBA)’s flagship lending program, the 7(a) loan program, can continue to meet increasing demand. In recent years, there has been an increase in demand for 7(a) loans, from $15.2 billion in FY2012 to $19.2 billion in FY2014, including $1.2 billion in lending to over 2,145 small businesses in Michigan. The bill passed by the Senate increases the program’s lending authority to $23.5 billion for the current fiscal year, tightens standards to promote loans to those who truly need it and includes robust reporting requirements to keep Congress updated on the pace of SBA lending going forward. Peters introduced the bill yesterday with Senate Small Business Committee Chair David Vitter (R-LA), Ranking Member Jeanne Shaheen (D-NH) and Senators James Risch (R-ID) and Chris Coons (D-DE).
“The SBA’s 7(a) loan program is a true success story, providing small businesses and startups with a versatile financing tool that can support a wide range of business development activities at no cost to American taxpayers,” said Senator Peters. “The fact that demand for 7(a) loans is increasing at a faster rate than we anticipated is a promising sign as our economy continues to bounce back. Helping small businesses succeed is one of my top priorities in the U.S. Senate, and I look forward to working with my colleagues to ensure next year’s lending level reflects the continued growth of small business loan demand.”
In April, Peters introduced the Small Business Lending Reauthorization Act of 2015 with Senators Jim Risch (R-ID), Cory Gardner (R-CO) and Jeanne Shaheen (D-NH) to increase the authorization levels for the SBA’s successful 7(a) small business lending program to $20.5 billion for FY2015 and $23.5 billion for FY2016. Just in the last few months, the 7(a) program has experienced unprecedented demand, approving over 45,000 loans this year totaling more than $16.5 billion – a 25 percent increase over this same period last year. Because of a growing economy and increased demand for small business loans, the SBA’s 7(a) lending authority could be jeopardized without this legislation.
Because the 7(a) Loan Guaranty program is funded entirely through fees paid by borrowers and SBA lenders, increasing the authorization level to $23.5 billion will have no cost to taxpayers.
The SBA’s 7(a) loan program helps small businesses and startups with a wide range of business development activities, including the establishment or acquisition of a business, business expansion, and the purchase of equipment, machinery, or supplies, as well as for short-term and long-term working capital. The 7(a) program’s maximum gross loan amount for any one 7(a) loan is $5 million – up to $3.75 million maximum guaranty. In FY2014, the average approved 7(a) loan amount was $368,737.
In Michigan, over 33,858 7(a) loans have been made since 1990. Over the past decade, 7(a) loans have supported at least 23,632 Michigan small businesses, totaling more than $10.1 billion.
Peters has long been a champion of Michigan’s small businesses and startups and authored the State Small Business Credit Initiative (SSBCI), which started in 2010. Many small businesses were struggling to find the resources needed to stay afloat after the recession, and the program leverages significant private capital with targeted federal investments. SSBCI has been a huge success, supporting nearly 100,000 jobs, including 4,000 jobs in Michigan. Over 500 loans have been made here in Michigan and have leveraged more than $430 million in private capital.
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