By U.S. Sen. Olympia J. Snowe(R-Maine)
The backbone of the American economy is breaking. Small businesses create 70 percent of net new jobs, represent 99.7 percent of all employer jobs, and will clearly play a vital role in lifting the American economy out of this recession. Yet with the current financial crisis choking off economic growth, these firms are being denied access to critical capital to further bolster their business and spur job growth. To try to unlock frozen credit markets and give hope to these job generators, I travelled to the White House from Capitol Hill last week to meet with President Obama, congressional lawmakers, and American business owners to discuss a plan to help small business weather these difficult economic times. As the Ranking Member of the Senate Small Business and Entrepreneurship Committee, I am pleased that President Obama has made helping small businesses a priority in his economic recovery plan.
Within the recently enacted American Reinvestment and Recovery Act, I championed and fought to secure several small business lending provisions. The provisions include: temporarily reducing or eliminating various lender and borrower fees, to bolster funding for the Small Business Administration’s (SBA) microloan program; and allowing Small Business Investment Companies to steer more dollars to start-up small businesses. Last week, President Obama announced that these provisions, which aim to thaw the frozen credit market by increasing guarantees and reducing fees, will take immediate effect. The immediate implementation of these critical provisions to will provide fee relief to borrowers and lenders in the SBA’s 7(a) and 504 loan programs, as well as an increased guarantee rate for 7(a) loans, comes not a moment too soon.
President Obama also announced that the Treasury Department will begin to use TARP funds to purchase pools of SBA loans from brokers and dealers to help boost bank liquidity. I have avidly expressed my support for this concept as it will provide liquidity into secondary markets and generate additional financing dollars for small businesses nationwide.
The White House Small Business summit gave me a chance to praise for President Obama’s selection of fellow Mainer Karen Mills as Small Business Administrator. In December, I was proud to formally recommend to the incoming Administration that Ms. Mills be selected for this critical position. I have worked with Karen over the years and she is an exceptionally capable individual who always has the interests of our nation’s small businesses in mind. She has a tremendous background in venture capital and lending, which will prove beneficial during these times in which small enterprises require every tool at their disposal to create new jobs.
I also took the time to reiterate my proposal to re-elevate the SBA Administrator to Cabinet-level status, as it was in the Clinton Administration. In conversations with President Obama, I urged him to restore the SBA’s status in order to realize its maximum positive impact on America’s 27 million small businesses, which create three quarters of net new jobs annually. I first recommended the re-elevation of the status of the SBA in a letter to Obama Administration in early December. Since its creation in 1953, the SBA’s programs have been providing small business financing, entrepreneurial development, and business counseling programs, while strengthening the Agency’s lender oversight authority. Yet despite these critical programs, our nation’s small businesses have endured eight consecutive years of inadequate budgets for the SBA, a 27 percent decrease since 2001, the largest decrease of any Federal Agency. As small businesses are responsible for half of all private sector jobs and created about 70 percent of all new jobs in the past decade, the SBA certainly deserves a seat at the table and the authority and funding necessary to help put America back on the road to economic growth.
Our present economic calamity threatens to shutter storefronts all across Main Street America – the very last thing we need at this critical juncture. At a time when small businesses should be turning to the safety of government-backed lending, SBA loan volume is in an absolute freefall. The unimpeded flow of credit is the lifeblood of our economy, but as small business credit markets remain frozen, our nation’s enterprises continue to lack the capital they require to maintain and expand their operations. By working together and listening to the needs of small business owners, I am certain that we can advance these aggressive policies that will thaw frozen credit markets, reduce lending fees for smaller firms and increase bank liquidity to ensure small firms can have continued access to credit. These steps will work to shore up America’s economic backbone; helping small businesses innovate and flourish and put us back on the path to prosperity.
