Contact: By: Nicole Gaudiano

Washington | July 28, 2010 - A group of moderate House Republicans is backing legislation Rep. Mike Castle says he proposed -- based on input from small-business owners in Delaware -- to use unspent stimulus money to provide tax breaks, reduce regulatory burdens and increase lending to small businesses.

"It is our position that the money that was in the stimulus package could be better used to help expand businesses [and] create permanent jobs," the Delaware Republican said during a news conference with other members of the Tuesday Group, a group of nine other moderates.

Rep. Charles Dent of Pennsylvania said business owners may be withholding capital "out of fear" of federal policies, including "looming tax hikes" and employer mandates in the new health care reform law.

"All these issues are out there creating an environment of uncertainty and fear, and some would even argue there may be a capital strike going on in this country," he said, adding that Castle's bill "sends a positive signal" to help create jobs.

The Senate is expected this week to consider small-business legislation backed by the Obama administration.

The Small Business Jobs Act is designed to increase lending to small businesses, create tax incentives for new investments, eliminate capital gains taxes on key investments and expand the size of loans that can be backed by the Small Business Administration.

"These are the kind of common-sense steps that folks from both parties have supported in the past -- steps to cut taxes and spur private sector growth and investment," Obama said on Tuesday after a bipartisan leadership meeting.

Castle was one of three Republicans to vote last month for the House version of the small-business bill the administration is supporting, and many of its provisions are similar to what he's proposing now. But Castle said his bill is a "better compilation of the things that directly would benefit small businesses at a reasonable cost."

The Democratic bill seeks to boost lending through state and community banks, but Castle's bill would directly reduce tax and regulatory burdens for small businesses, according to his office.

Both bills seek to increase Small Business Administration loan limits. That's something Frank and Donna Masley of Wilmington's Masley Enterprises Inc., said they needed during a recent roundtable discussion Castle hosted for a handful of small-business owners.

They got close to the maximum SBA loan to cover their expenses after winning a $7 million Army contract to make 100,000 specialized military gloves. The loan was just enough to cover labor and materials, given that the gloves shipped on time and the federal government paid on time, Frank Masley said.

Masley said an increase in the SBA loan maximum would help expand the business of 46 employees and compete with companies making up to 400,000 pairs of gloves each year.

Under current loan limits, "we wouldn't be able to borrow enough money to take those kinds of contracts and bring jobs to Delaware," Masley said. "By asking for that higher loan amount, it will allow businesses to grow that much more."