December 16, 2009

Congressman Artur Davis introduces bill that would use leftover TARP money to help Alabama Businesses Survive

Congressman Artur Davis introduced H.R. 4340, the "Main Street Survival Act." The legislation would establish a $1 billion revolving loan fund for small and midsized businesses who are struggling to obtain credit in the aftermath of the recession. The bill would seed the fund with left over dividends from the TARP program. The fund would be administered by the Department of the Treasury. Davis issued the following statement:

"As the House adjourns for the year, not nearly enough has been done to protect jobs in the midst of the highest unemployment in 26 years. While I voted today for a bill that will extend unemployment benefits and health insurance for laid off workers, it is not sufficient to expand the safety net-we need to save jobs and we need to acknowledge that the same banks who received vast government assistance are still not lending to small and midsized businesses. If this revolving loan fund had been in place last summer, Meadowcraft in Selma might have survived and New Era Cap Co. in Demopolis might have a lifeline."

"I recognize that some of my colleagues prefer to use leftover TARP money as a rainy day fund for big banks. In my opinion, that would only spur banks to resume the careless lending and investment practices that almost wrecked our economy. Some argue that the funds should be used for deficit reduction, a much more worthy idea. But the reality is that a significant chunk of the TARP dividends should be devoted to the purpose that TARP was meant to serve-the survival of deserving businesses who are in danger of shutting their doors and the protection of jobs."

H.R. 4340 will limit eligibility to businesses who employ less than 1000 workers and whose current financial condition makes it likely that they will have to make layoffs. Eligible businesses will also have to demonstrate an ability to repay the loan. A business may use the funds to finance the cost of operations, but may not use the funds to expand operations. The maximum loan amount would be $1 billion, in aggregate, in any fiscal year and the duration of the revolving loan program would be 3 years from the enactment of the Act.

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