FOR IMMEDIATE RELEASE 
Thursday, September 23, 2010

CONTACT: Alan Mlynek
Office: (202) 225-5802

PETERS’ SMALL BUSINESS PLAN PASSES FINAL VOTE

The State Small Businesses Credit Initiative, a provision written by Peters, will result in at least $870 million in new small business lending in Michigan

(Washington, DC) – The U.S. House of Representatives approved Representative Gary Peters’ plan to help small businesses grow and create jobs.  The bill, the Small Business Lending Fund Act of 2010 (H.R. 5297) helps small businesses access capital through two lending approaches championed by Peters and provides tax breaks to incentivize business investment. 

“For over a year  I have been talking to small business owners on Main Street who are ready to add jobs but cannot because Wall Street banks refuse to give them the loans they need.  Their stories are the driving force behind this legislation,” said Rep. Peters.  “Putting capital in the hands of our small businesses and entrepreneurs is one of the best things we can do to spur job growth.  The new lending will allow small businesses to put people back to work.”

Making it easier to start and grow a small business has been a top priority for Gary Peters.  Peters voted against his party’s second stimulus measure last December because he believed it contained far too little for small businesses.  He then immediately began fighting for an alternative plan which is now embodied in today’s legislation. 

The legislation allows small lenders to access and disburse capital from a small business lending fund that must eventually be paid back, with interest.  $30 billion in government capital will generate up to $300 billion in private sector lending to small businesses. 

The State Small Businesses Credit Initiative (Title III) was written by Peters and added to the legislation during committee consideration earlier this year.  This section of the bill will allow states to create or strengthen existing innovative small business lending programs.  Under the formula in the legislation, Michigan will receive $87 million for its lending programs which must be leveraged at least 10 to 1, resulting in at least $870 million in new lending.

Michigan has been a national leader in developing small business lending programs such as the Michigan Collateral Support Program and the Michigan Supplier Diversification Fund.  Projections show that these efforts are already responsible for 14,500 more jobs for Michigan and approximately $140 million in private sector capital made available to small businesses.

Other provisions in the bill allow small businesses to write off the cost of new investments and extend successful loan programs at the Small Business Administration.

Background on Title III – State Small Business Credit Initiative:
Authored by Rep. Peters

Title III is based on the State Small Business Credit Initiative Act (H.R. 5302), introduced by Reps. Gary Peters, Sander Levin and John Dingell.  This section of the bill authorizes two types of state lending programs: Capital Access Programs and “other innovative loan programs.”  Both types of programs efficiently generate large amounts of private financing for small businesses to innovate and create new jobs. 

• Capital Access Programs: Capital Access Programs create loan portfolio insurance programs for participating financial institutions which are 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.  These programs have already been successfully implemented in about 30 states. 
   
• Other Innovative Loan Programs:  States may develop new programs to bolster small business lending.  A state must establish that, in total, their programs will support at least ten dollars in private lending for every dollar in federal support.  Participating lenders must share in the risk of default with the government.   

These efforts are designed to address the critical reasons why the small business lending market is currently frozen: lack of sufficient capital reserves on the part of lenders and collateral shortfalls on the part of borrowers.  This title allows flexibility for states to develop strategies to promote lending specific to the needs of small businesses in their region.

Background on Rep. Peters’ Record of Putting Small Businesses First:

Since becoming Oakland County’s new representative last year, making it easier to start and grow a small business in Michigan has been Representative Peters’ top priority.

Last year, Rep. Peters convened a field hearing in Southfield so that Members of Congress could hear directly from Oakland County small businesses and community banks about the lack of available capital for business lending in Michigan.  Deputy Secretary of Commerce Dennis Hightower accepted an invitation from Peters earlier this year to visit Oakland County and take part in a roundtable with small businesses.  Peters then launched a survey of small business owners’ opinions on federal policies to be delivered to congressional leaders and Administration officials.  Later, he engaged in a small business tour, going door-to-door to talk with small business owners in cities throughout Oakland County.

Using the feedback he received from small business owners in Oakland County, Rep. Peters developed a number of proposals to help small businesses innovate and create jobs, such as those included in the legislation passed today.  Rep. Peters also wrote and passed a measure to allow small businesses in high unemployment states to access zero-interest loans of up to $75,000, repeatedly supported cutting small business taxes and introduced and passed a bill with Republican Vern Ehlers to reduce costs for small manufacturers participating in the Manufacturing Extension Partnership.

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