Cummings Pleased To Help Pass Small Business Aid

Cummings Pleased To Help Pass Small Business Aid

Congressman votes for $30 billion in small business loans to help create American jobs.

(Washington, DC) – Congressman Elijah E. Cummings (MD-07) today voted yes on H.R. 5297, the Small Business Jobs and Credit Act. The legislation, which was passed by the Senate last week, will create a new $30 billion lending fund for small and medium sized community banks ($10 billion or under) that could leverage up to $300 billion in lending.

“Our small businesses continue to be engine of our economy and they are still sputtering,” said Cummings. “This legislation will inject some much needed capital into the system, allowing businesses to borrow money they can use to expand, to hire Americans, and to flourish. I was happy to see the Senate approve this bill last week, and I am proud to continue the Democratic record in this Congress, of passing legislation that has created jobs, helped to encourage our manufacturing sector and which will work to continue our economic recovery.”

The bill includes tough performance-based incentives to make sure that banks lend to small business. Banks with assets of less than $1 billion would be able to borrow an amount equal 5% of their assets, and banks worth up to $10 billion would be eligible for an investment of up to 3% of their assets.

Banks will repay the government's investment at a dividend rate starting at 5% with lower interest payments if they expand their small business lending. That rate would drop by 1% for every 2.5% increase in small business lending that the bank shows compared to 2009.  A lender could cut its dividend rate to just 1% by increasing small business loan portfolio by 10%. But if the bank reduced its small business lending, its repayment dividend would shoot up as high as 7%.

The program would only be available to banks with assets of less than $10 billion -- ruling out the megabanks that have drawn fire for putting their own interests before their customers.

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