Dr. Earl R. Smith II

by Giovanni Coratolo

This week the U.S. Chamber sent a document to Capitol Hill with a number of proposals for lawmakers to consider that, if enacted, will provide more capital for small and mid-sized businesses to grow the economy and create jobs. Many of the proposals have bi-partisan support and are contained in existing pieces of legislation in both the House and Senate.

Access to Capital Lending Provisions

Access to capital through financial institutions is critical for small enterprises if they are to fully unleash the job-creating engines that are vital in igniting an economic turnaround for the country. One source of funding, the SBA 7(a) and 504 government guaranteed loan programs, plays an essential role in providing an alternative means of obtaining capital for many small business owners where funding has not been available through conventional lending methods. Although the volume of lending through SBA lending programs has dramatically rebounded over the past year due to incentives contained in prior legislation that was supported by the U.S. Chamber, loan volume is still at depressed levels, compared to pre-recessionary times.

In order to have capital available for small businesses so that they can create jobs and help revive the economy, we support the following legislative efforts:

• Temporarily extend and fund through the current calendar year the reduced borrower and lender fees for the SBA 7(a) and 504 loan programs.
• Extend and fund through the calendar year the 90% government guaranteed percentage of SBA 7(a) loans.
• Make improvements to the SBA Express loan program.
• Increase the maximum loan size and maximum guaranteed portion of SBA loans.
• Changes to the SBA 504 program to temporarily allow for commercial real estate refinancing.
• Collect more current data on small business lending.
• Survey of Consumer Finances to collect information on the finances of business-owning households.

Greater Transparency

Small businesses that need lending should have more information at their disposal in order to drive competition among the financial institutions that want to attract their business. Whether from the Export-Import Bank or the SBA, all government guaranteed business lending is public information. Information on who received these loans and the financial institutions that made them should be readily available through a comprehensive database on a government-run website. Small businesses needing financing should be able to immediately identify and sort the information in order to drive a more competitive marketplace for acquiring a loan.

Provide a Single Government Source for Information

The government is involved in small business lending through a variety of entities, for example, the Department of Agriculture, the SBA, and the Export-Import Bank. There should be a one-stop shop — e.g. smallbusinesslending.gov — that would provide valuable information on how these loans are obtained and the financial intermediaries and their contact information capable of handling the transactions.

Support Innovation

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs Congress established the Small Business Innovation Research program in 1982 to provide a fraction of federal agencies’ research budget to small businesses in the form of grants. This program, over the years, has successfully harnessed the talents of small businesses to help meet the government’s research and development needs when there was significant concern that the United States was falling behind its global competitors in developing innovative technologies. U.S. technological supremacy is again being challenged, yet SBIR and STTR currently do not enjoy a long-term reauthorization.

To ensure that small businesses are fully involved in advancing the nation’s innovation and technology, we need to expeditiously negotiate a comprehensive long-term reauthorization of these two critical programs. Te programs have currently been on life support with a series of short-term reauthorizations that have created an unstable environment for SBIR and STTR program managers to administer funding. This has served to undermine an important program that provides a source of capital for small businesses.

Read the report.