President Barack Obama has called for expanding the size of loans made through the Small Business Administrations SBA Express program from $350,000 to $1 million.
Obama also proposed on Friday to expand the Certified Development Company/504 program to provide more refinancing of existing commercial real estate mortgages. In his weekly address on Saturday, Obama urged Congress to move forward with these and other recent proposals to aid small businesses.
Lets put more Americans back to work, and lets give our smallbusiness owners the support to do what theyve always done: the freedomto pursue their dreams and build our countrys future, he said.
Obama has also recently proposed using $30 billion in funds from the Troubled Asset Relief Program to create a new Small Business Lending Fund to provide capital to community banks to increase landing to small businesses (see Obama Lobbies for $30B Small-Biz Lending Fund). The White House has also called for a new tax credit for over 1 million small businesses that hire new workers or raise wages, and the elimination of all capital gains taxes on small business investments. In addition, Obama wants to provide targeted support for innovative small businesses with the potential to export new goods and products.
However, Obama may encounter resistance even from Democratic members of Congress. Rep. Nydia M. Velázquez, D-N.Y., chairwoman of the House Committee on Small Business, criticized both of his proposals Friday to expand the SBA programs.
With loan defaults on the rise, we should not base our strategy on increasing the size of the least stable SBA lending program, she said in a statement. SBA Express has acted as nothing more than a giveaway to Big Banks and expanding it will neither further economic recovery, nor create new jobs.
Velázquez also objected to the commercial real estate refinancing proposal, noting that there is currently a requirement that projects create new jobs to qualify for CDC/504 financing. She argued that expanding the initiative to refinance commercial real estate debt would make the program less effective. The SBAs Certified Development Company initiative is intended to promote job growth and economic development, she said. The refinancing of commercial real estate debt does not create jobs and, in fact, may dilute the program, drawing resources away from projects that do have job creation potential.
The reaction of her counterparts in the Senate was more favorable. Senate Committee on Small Business and Entrepreneurship Chair Mary L. Landrieu, D-La., and ranking member Olympia J. Snowe, R-Maine, generally praised the SBA proposals on Friday.
I applaud President Obama for his continued focus to aid small businesses and for supporting the refinancing of small business real estate loans, a proposal that closely matches one I originally introduced as part of S.2869, The Small Business Job Creation and Access to Capital Act, said Landrieu in a statement. Many viable small businesses now face a new hurdle, finding refinancing on their maturing real estate debt, without a fully functional commercial real estate market. The presidents proposal and my bill will help these businesses weather the latest storm.
Snowe also reacted favorably to Obamas SBA proposals. It is essential that we continue our efforts on a bipartisan basis to help these firms stay in business and focus on the urgent tasks of growing our economy and creating jobs, she said in a statement. I also reiterate my call that the president consider promoting additional cost-effective measures contained in both the lending and exporting legislation this committee recently passed to get our nation's economy back on track."
In December, Landrieu and Snowe introduced and passed out of committee S.2869, The Small Business Job Creation and Access to Capital Act (see Senate Introduces Bill to Boost Small-Biz Lending). As with Obamas proposal, the bill allows the SBAs 504 loan program to refinance short-term commercial real estate debt into long-term, fixed-rate loans. It would also raise the cap on small business loans and extend Recovery Act measures to temporarily eliminate borrower fees and increase loan guarantees, which are part of Obamas small business job creation agenda. Together, the provisions are expected to support $18.5 billion in additional loans by the end of the fiscal year and could produce more than 225,000 jobs.
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