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(Washington D.C.)- U.S. Representatives Gary Peters, Sander Levin and John Dingell have introduced legislation to help promote small business lending and create jobs. The legislation, the State Small Business Credit Initiative Act (H.R. 5302), will promote state-based partnerships with financial institutions to help small businesses and especially smaller manufacturers access the credit they need to innovate and grow. The three representatives originally introduced similar legislation in February and have been working with the Administration on how best to address specific issues that have kept too many businesses from accessing credit.
Last Friday President Obama announced his support for a revised proposal, the legislation the three Michigan representatives have now introduced. The Financial Services Committee is scheduled to vote on this and other small business lending legislation as early as next week.
“Michigan small business owners tell me they are ready to invest and create jobs again if they could just get a loan,” said Rep. Peters. “Wall Street banks won’t lend to Michigan small businesses and that is slowing job creation and hurting our recovery. We need an alternative way to get our entrepreneurs and innovators the credit they need to grow.”
“Businesses everywhere, and particularly manufacturers, are rapidly adapting to new technology and working to improve their global competitiveness,” said Rep. Levin. “The lynchpin of their ability to expand, diversify, and hire is access to credit. State credit access initiatives, like the one in Michigan, have shown their ability to get capital in the hands of those who will use it to grow the local economy and these efforts should be strengthened.”
“The growth of small businesses in my district, and indeed across the country, is hampered by a persistent lack of private credit,” said Rep. Dingell. “The State Small Business Credit Initiative Act will provide federal support to states to implement capital access and collateral support programs, which have a proven track record of stimulating private lending with very small amounts of public resources. It is imperative that this legislation be enacted so that small businesses, traditionally the drivers of growth in the American economy, once again can access private credit and in so doing, create the jobs this country so direly needs.”
H.R. 5302 will strengthen the Michigan Collateral Support Program and help states create or improve other innovative lending programs that will quickly inject needed capital into small businesses.
The Administration also announced last Friday its support for a plan to promote lending to a wide variety of small businesses through a partnership with smaller, local community banks. Congressman Peters plans to offer H.R. 5302 as an amendment to the broader small business plan when the Financial Services Committee considers the legislation.
Background:
The State Small Business Credit Initiative Act (H.R. 5302), introduced by Reps. Gary Peters, Sander Levin and John Dingell, authorizes two types of state lending programs: Capital Access Programs and “other innovative loan programs.” Both types of programs use small amounts of public resources to generate large amounts of private bank financing.
• Capital Access Programs: These programs have already been successfully implemented in about 30 states. They create loan portfolio insurance programs for each participating financial institution supported by fees paid by the borrower, the lender, and the state. By bolstering the reserve pools that protect lenders from default risk, states are able to help banks and credit unions expand the range of small businesses to which they are willing to lend.
• Other Innovative Loan Programs: These are new programs developed by the states or existing credit support programs. A state must establish that every dollar of federal investment will be matched by at least one dollar of private funds in each program funded. They must also show that, in total, their programs will support at least ten dollars in private lending for everyone dollar in federal support. Participating lenders must share in the risk of default with the government.
Cosponsors of H.R. 5302:
• Rep. Dan Maffei
• Rep. John Sarbanes
• Rep. Silvestre Reyes
• Del. Eleanor Holmes Norton
• Rep. Mark Schauer
• Rep. Bill Pascrell
• Rep. Bart Stupak
• Rep. Niki Tsongas
• Rep. Melvin L. Watt
• Rep. Paul Tonko
• Rep. Bob Etheridge
• Rep. Linda Sánchez
• Rep. John Adler
• Rep. Paul Kanjorski
• Rep. Dennis Moore
• Rep. Mike Michaud
• Rep. Betty Sutton
• Rep. Melissa Bean
• Rep. Dan Lipinski
• Rep. Gwen Moore
• Rep. Dave Loebsack
• Rep. Dale Kildee
• Rep. Brad Miller
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