By U.S. Rep. Mike Michaud(D-Maine)
Small businesses are the engine of our economy, creating two-thirds of the new jobs over the last 15 years. But they continue to face a lack of credit and tight lending standards.
A recent Federal Reserve survey found that almost 11% of banks had cut small business credit lines over the last quarter. And for 2009 the FDIC reported the largest annual decline in lending since the 1940s. If we are to grow our economy and create jobs again, it’s crucial that we address this small business credit crunch.
To that end, I am pleased to report that on June 17th the House of Representatives passed a bill that will leverage up to $300 billion in loans for small businesses through a $30 billion lending fund for community banks that focus on lending to small firms. The bill also provides some important tax relief, including a capital gains tax cut for those who invest in small businesses and an increase to $20,000 (from $5,000 in current law) of the deduction for start-up expenditures in connection with investigating the creation of a business.
Passing this bill is an important step forward that is badly needed to help our economy recover. While we passed an elimination of certain SBA loan fees earlier this year, this bill will further improve the ability of our small businesses to startup, expand operations and create jobs.
The new lending program created in the bill also provides $2 billion in funding for state lending programs that use small amounts of public dollars to generate substantial private bank financing. This new program is expected to support over $20 billion in additional small business lending, building on the proven potential of existing state lending initiatives. In Maine, these programs have been extremely effective at getting small businesses the access to capital and the technical support they need.
To make sure the new program works well for Maine, the House passed an amendment that I authored that will ensure state-run venture capital programs, like Maine’s Small Enterprise Growth Fund, are eligible to participate in the new program. My amendment also clarifies that state financing programs like the Finance Authority of Maine (FAME), which also work with larger businesses, will be eligible for the new program’s funding as long as they use the new funding to lend to small firms.
These important new measures, which are designed to help small businesses now, await action by the Senate. Small firms in Maine and across the county continue to face a lack of credit: 45 percent of small businesses seeking loans were unable to get their credit needs met in 2009. I urge the Senate to quickly pass this important bill so that we can get this much needed help to our communities and small businesses.
