New initiatives can help Maine small business owners create jobs

By U.S. Sen. Olympia J. Snowe
(R-Maine)
    Just nine months ago, our nation’s economy was at the brink of collapse and rapidly contracting. Consumer confidence was at a record low. And countless financial institutions refused to lend critical capital to small businesses, leading to a full-blown credit crisis. As a result, our nation’s job creators were simply unable to generate the necessary opportunities for employment and expansion.
    In February, Congress passed the American Recovery and Reinvestment Act. That legislation contained several critical lending provisions that I championed to specifically benefit small businesses. Included in the package were provisions to temporarily reduce or waive lender and borrower fees for the Small Business Administration’s (SBA) flagship 7(a) and 504 loan programs, and temporarily raise the guarantee level up to 90 percent for 7(a) loans. As a result of our action, average weekly SBA loan volume has increased more than 70 percent, and over 1,200 financial institutions that ceased issuing SBA loans at the onset of the financial crisis are once again lending again today.
    That said, there is still significant work that remains to be done, which is why I was pleased to see President Obama announce a set of initiatives on Wednesday designed to further bolster small businesses’ ability to access capital. These are positive steps that can help entrepreneurs improve and strengthen their businesses. I am particularly pleased that the President adopted my ideas to increase the caps on the SBA’s 7(a) and 504 loans to $5 million in most instances, and to raise the maximum loan size for microloans from $35,000 to $50,000. These actions will help satisfy the capital requirements of small businesses looking to start or expand their operations. They were good ideas when I introduced them nearly a year ago, they remained good ideas when I reintroduced them in August, and Congress should swiftly make them law.
    I am well aware of the fact that community banks in Maine have done a tremendous job in making capital available to small businesses. That said, I know that credit remains tight across the nation. As such, I am encouraged by the President’s proposal to enable our small banks to access more Troubled Asset Relief Program funds they can, in turn, lend to credit-starved firms and entrepreneurs in the cities and towns they serve. While I will be watching closely to ensure this program is implemented in a manner that safeguards taxpayer funds, it is heartening that the Treasury Department will promote transparency by requiring banks to submit a plan for how they will use borrowed funds to spur small business lending and subsequently report on those activities.
    After introducing my Next Step for Main Street Credit Availability Act in August, I held small business events in Portland and Bangor, where I again heard directly from small business owners frustrated by the relatively low loan sizes for the SBA’s 7(a), 504, and microloan programs. These entrepreneurs want to create jobs and opportunities for American workers, but they find themselves stymied by a lack of available capital. The President’s announcement in support of my initiatives puts us one step closer to ensuring that these critical provisions can have a deep and meaningful impact on the availability of credit to Maine and America’s small businesses.
    At the end of the day, these measures will help small business owners invest in new equipment, grow their companies, and create well-paying, quality jobs. If we are to clear one of our biggest remaining hurdles – a high unemployment rate – we will once again have to rely on this nation’s 30 million small businesses to come to the rescue and help revitalize our economy.