Peters Introduces Bipartisan Bill to Increase Small Business Lending
WASHINGTON, DC – U.S. Senator Gary Peters (MI), a member of the Small Business and Entrepreneurship Committee, today announced he has introduced bipartisan legislation to ensure the Small Business Administration (SBA)’s main lending program, the 7(a) loan program, can continue to meet the increasing small business demand for loans. 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. Peters introduced the Small Business Lending Reauthorization Act of 2015 with Republican Senators Jim Risch (ID) and Cory Gardner (CO) and Democrat Jeanne Shaheen (NH).
“Small businesses are the backbone of our economy, and ensuring that they have the resources to survive, compete, and succeed is one of my top priorities in the U.S. Senate,” said Senator Peters. “Access to capital is one of the biggest hurdles facing small businesses and startups, and I’m proud to introduce this commonsense, bipartisan bill to help small businesses obtain the loans and credit they need to grow their companies. I look forward to working with my colleagues to support lending so that critical loans to small businesses can continue.”
The Small Business Lending Reauthorization Act of 2015 increases 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. In FY 2014, the SBA approved 52,044 7(a) loans totaling $19.2 billion. Recent data has shown an increase in demand with industry experts predicting that volume will reach $20.5 billion by the end of FY15, significantly more the $18.75 billion approved by Congress last December. Peters’ legislation would allow the program to meet projected demand without having to ask for an emergency increase. 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 primary lending program, the 7(a) loan program, provides eligible small businesses and startups with a versatile financing tool that can be used to support 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 start-ups 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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