[Congressional Record Volume 140, Number 59 (Friday, May 13, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 13, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                         ADDITIONAL STATEMENTS

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      TO AMEND THE SMALL BUSINESS INVESTMENT ACT OF 1958--S. 2061

 Mr. GORTON. Mr. President, I speak today on behalf of the many 
small businessowners in Washington State, who, through their hard work 
and determination, provide jobs and economic opportunity to thousands 
of Washingtonians. One such small businessowner, Doris Johnson of 
Vancouver Bolt and Supply, Inc., has led a grassroots effort to right a 
wrong imposed by the Government on small businesses throughout the 
Nation. Ms. Johnson's efforts have attracted thousands of supporters 
and her movement continues to gain strength and momentum across the 
country.
  Ms. Johnson brought to my attention, and to the attention of many in 
the Federal Government, the problem thousands of small businessowners 
face today because of their ambition to start or expand their 
businesses in the 1980's. The problem I am addressing today is that of 
the enormous prepayment penalties associated with Small Business 
Administration 503 loans. In the 1980's, when interest rates were much 
higher, SBA 503 loans provided long-term fixed rate financing to small 
businesses that needed industrial or commercial buildings, machinery, 
and equipment. Today, over 3,000 such loans remain in existence. Many 
of these loans have interest rates as high as 15.7 percent. However, 
businessowners are prevented from prepaying these loans because of 
their devastating prepayment penalties--some as high as 40 percent.
  The prepayment penalties are discouraging many small businessowners 
from expanding their businesses and taking out additional loans. In 
effect, the 503 loan prepayment penalties are damaging our economy. It 
is for this reason that I have decided to join my colleagues in 
cosponsoring S. 2061, a bill to amend the Small Business Investment Act 
of 1958. This legislation, introduced last week by Senator Bumpers at 
the request of the administration, would replace the 503 loan 
prepayment penalty with a much more reasonable penalty, that currently 
associated with SBA 504 loans.
  I have cosponsored similar legislation in the past, and will continue 
to give my full support to a revision of the 503 prepayment penalty 
until this situation is rectified. I would like to commend the 
administration for its efforts to work with the small business 
community and its supporters in Congress. It is my hope that this 
legislation will be successful in its attempt to find a long-awaited 
solution to a problem which has prohibited small business from creating 
jobs and economic opportunity long enough.
  Many small business men and women in Washington State and across the 
country need this legislation to expand or sell their businesses. The 
elimination of the excessive prepayment penalty for 503 loans will 
undoubtedly lead to economic growth and provide jobs and opportunities 
for families and communities cross Washington State and the Nation. For 
this reason alone, Mr. President, I urge the Senate to act quickly on 
this legislation.

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