The House overwhelmingly approved legislation to reform small business lending and spur job creation.
H.R. 3854, the Small Business Financing and Investment Act, passed by a vote of 389 to 32, will raise Small Business Administration loan maximums. The SBAs 7(a) loan program maximum will go from $2 million to $3 million. The maximum long-term financing that the SBA provides under the Section 504 program will increase from $2 million to $25 million for small manufacturers who create jobs.
The SBA will also be able to provide a capital backstop so it can make the loan itself if a bank will not provide the loan to a small business. The SBA would be able to act as a matchmaker between lenders and businesses. In times of tight credit, the legislation allows the SBA to step in and fill in the gaps when private lenders stop lending.
This bipartisan bill makes it easier for businesses to get loans and access capital, and gives local banks and credit unions the confidence to open lending to a wider community of entrepreneurs, said House Speaker Nancy Pelois, D-Calif., in a statement.
The bill would support $44 billion in lending and investment every year, and help create or save an estimated 1.3 million jobs annually. A new public/private partnership at the SBA would invest in fledgling small businesses, so they can launch and create jobs. The legislation would also provide technical assistance and training for individuals taking out microloans. The microloans would help dislocated workers launch their own business.
Two weeks ago, my committee heard from an entrepreneur who used microloans to grow his business from a fledgling firm to a thriving enterprise with 30 employees, said House Small Business Committee chair Nydia Velázquez, D-N.Y. By improving the microloan program, imagine how many more new businesses--and new jobs--we can generate.
The legislation also reduces the paperwork required for SBA loans, and increases loan sizes, giving businesses access to larger amounts of capital. The bill also establishes a new training program to encourage lender participation, creating more choices for businesses seeking to acquire SBA-guaranteed loans.
In addition, the legislation strengthens the SBAs disaster loan program, providing a one-year deferment on SBA disaster loans. The legislation increases outreach so that, after disasters, small businesses can better take advantage of SBAs existing disaster loan programs. H.R. 3854 also creates a new grant program so small firms can receive grants of $100,000 in order to help them recover from disasters.
A new program at the SBA will help smaller and solo health practitioners adopt health information technology to improve patient care, reduce health care costs and speed the adoption of electronic health records among small practitioners.
