Peters’ Small Business Lending Bill Advances in Senate
Bipartisan Bill That Would Ensure Continuation of Key Small Business Loans Passes Small Business Committee
WASHINGTON, DC – A bipartisan bill introduced by U.S. Senator Gary Peters (MI) to strengthen the Small Business Administration (SBA)’s main lending program, the 7(a) loan program advanced in the Senate today when it was unanimously passed by the Senate Small Business and Entrepreneurship Committee. 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, and Peters’ bill would ensure the program can meet increased demand. Peters, a member of the Senate Small Business Committee 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 critical to Michigan’s continued economic recovery, and the 7(a) program provides the necessary capital for entrepreneurs to start and grow their businesses. Congress must act to strengthen the SBA’s 7(a) loan program, and I am pleased that this bill has passed the Small Business Committee with widespread bipartisan support,” said Senator Peters. “I look forward to working with my colleagues on both sides of the aisle to secure passage in the full Senate.”
“Access to capital remains one of small businesses biggest concerns,” said Senator Risch. “The 7(a) program has helped provide billions of dollars to America’s small businesses, the engine that produces American jobs and drives our economy.”
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.
"We applaud Senators Risch, Peters, Gardner, and Shaheen for their support of small business lending. 7(a) loans have helped hundreds of thousands of small businesses open their doors, create jobs, and grow and expand, all at no cost to taxpayers," said National Association of Government Guaranteed Lenders (NAGGL) President Tony Wilkinson. "Without an increase in appropriations, 7(a) lending will most likely shut down in FY 2015 before the fiscal year’s end given the success and growth of the portfolio. Today's markup was an important first step towards ensuring that small businesses can continue to receive these loans."
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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