News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release                                                       CONTACT:  Alex Haurek; Duncan Neasham
September 23, 2009                                                                                                        (202) 226-3636

House Votes to Extend SBA Programs Set to Expire
Legislation Improves ARC Loan Program to Help More Small Businesses Stay Afloat

WASHINGTON, DC – The House today passed legislation ensuring that critical Small Business Administration (SBA) programs and services continue operating. Rep. Nydia Velázquez (D-NY), Chairwoman of the House Small Business Committee, said that in addition to keeping various SBA initiatives operating, the bill, H.R. 3614, would make two important changes to SBA programs to improve small businesses’ ability to access capital.

“This extension will not only keep vital programs at the SBA running, but will also improve access to capital for small firms,” Velázquez said. “Small businesses will be central to our economic recovery and this measure will ensure they can continue to access the tools they need.”

The legislation that the House passed strengthens the America’s Recovery Capital (ARC) loan program, an interest-free loan measure that was created through the American Recovery and Reinvestment Act. As currently crafted, proceeds from ARC loans, which can total $35,000, cannot be used to pay down debts on existing government-guaranteed loans like the 7(a) program. By allowing ARC loans to be used for this purpose, the bill would make more firms eligible for the program, opening up $360 million in capital for small businesses. The American Bankers Association and the Independent Community Bankers of America have both endorsed the provision.

“Already, 1,600 small businesses have received help from the ARC loan program so that they can meet payroll and keep their doors open,” Velázquez said. “This bill will open the program up to more firms that need a short-term capital injection in order to weather the current rough patch. For example, stressed businesses with 7(a) loans could receive as much as $6,000 that they could apply toward their existing debt, freeing up funds to invest in their operations.”

In addition to modifying the ARC loan program, Velázquez noted that the bill would make changes to the New Market Venture Capital program, a longstanding initiative that helps steer capital to the smallest businesses located in economically distressed areas. The legislation would streamline the program’s rules so that the nation’s smallest firms can raise more capital through the program.

“The New Market Venture Capital program helps our smallest entrepreneurs who operate in the most economically hard-hit parts of our nation,” Velázquez noted. “This legislation will ensure that more capital flows to firms participating in the New Market Venture Capital program, bringing hope and opportunity to many of our economically depressed regions.”

To date, the House Small Business Committee has pursued reforms making the SBA stronger through bipartisan legislation updating the agency’s various programs. In May, the House passed job-creating entrepreneurial development legislation, followed in July by bills boosting the SBA’s budget and improvements to small business research programs. The legislation approved today would extend SBA programs set to expire at the end of this month until the end of October, keeping the agency’s key services running while also providing time for Congress to continue its legislative reauthorization work. H.R. 3614 passed the House by a vote of 417 to 2 and now heads to the Senate for approval.

###