SBA Microloan Program - Legislative Update

Friends of the SBA Microloan Program: Legislative Update

Senate Small Business Committee Hearing - A quick report on the hearing that the Senate Committee on Small Business and Entrepreneurship held last month regarding - Reauthorization of Small Business Administration Financing and Entrepreneurial Development Programs.

While the Committee did not invite an SBA Microlending Intermediary to testify, Committee Chairman Olympia Snowe (R-ME) directed a question to the Committee’s first witness, SBA Administrator Barreto, about the Microloan Program. Chairman Snowe reiterated her support for the Microloan Program and challenged the Administration’s efforts to eliminate a program that has been so important to small business in Maine and other rural states across the country.

Administrator Barreto responded by stating that the SBA can serve more micro-businesses through their flagship 7(a) program using the SBA Community Express Program. He pointed to the fact that the average Community Express loan is $150,000 (hardly a micoloan). He also re-stated the SBA assertion that it costs the SBA $1 in federal funds to deploy $1 dollar in loans to a microbusiness. The Administrator admitted that despite these assertions, Congress has continued to support the program. However, he was also clear that the SBA does not recommend that the micriloan program be reauthorized.

Chairman Snowe responded to the Administrators comments by stating that “There is no question that it (the SBA Microloan Program) will be restored in reauthorization legislation.”

While this was a strong and reassuring message coming from Senator Snowe – it is clear that the Administration has not softened it’s view on the SBA Microloan Program and we can expect that they will be working hard to keep it from being funded in FY 2007 or reauthorized in this Congress.

A Wall Street Journal on Tuesday, April 25th, Microloans Are Again a Point of Budget Dispute, describes the Administration’s attempt to eliminate the program and presents the counter arguments coming from both the field as well as from Congress.

Please pass on to your members of Congress some local counter-arguments of your own. It is particularly important for Members and their staff to hear about borrowers that CANNOT secure loans from the 7(a) Community Express lenders.

Also - Please pass on any other local or national press that you come across on the SBA Microloan Program. These stories were of great interest in Congress. I will gladly share the Wall Street Journal article with anyone that would like that as well, just contact me directly.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
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