[Congressional Record Volume 140, Number 142 (Tuesday, October 4, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 4, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
      CONFERENCE REPORT ON S. 2060, SMALL BUSINESS ADMINISTRATION 
               REAUTHORIZATION AND AMENDMENT ACT OF 1994

  Mr. LaFALCE. Mr. Speaker, I ask unanimous consent for the immediate 
consideration of the conference report on the Senate bill (S. 2060), to 
amend the Small Business Act and the Small Business Investment Act of 
1958, and for other purposes, and ask that it be considered as read.
  The Clerk read the title of the Senate bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New York?
  There was no objection.
  (For conference report and statement on the Senate bill, see 
Proceedings of the House of Monday, October 3, 1994, at page H10521.)
  The SPEAKER pro tempore. The gentleman from New York [Mr. LaFalce] 
will be recognized for 30 minutes, and the gentlewoman from Kansas 
[Mrs. Meyers] will be recognized for 30 minutes.
  The Chair recognizes the gentleman from New York [Mr. LaFalce].
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. LaFALCE asked and was given permission to revise and extend his 
remarks, and to include extraneous matter.)
  Mr. LaFALCE. Mr. Speaker, I rise in strong support of the conference 
report on S. 2060, the 1994 Small Business Authorization and Amendment 
Act.
  Mr. Speaker, this bill incorporates significant expansions of key SBA 
loan, investment and management assistance programs. Over the next 3 
years, this legislation will potentially channel $48 billion in loan 
guarantees and almost $3 billion in venture capital to the Nation's 
small businesses. These funds will catalyze additional billions of 
dollars in private sector lending and investment in small businesses 
nationwide.
  Specifically, the key provisions of the Small Business 
Reauthorization and Amendment Act of 1994 are as follows:
  First, it increases authorization levels for critical SBA programs: 
For 1995, $130 million in direct loans, $13 billion in loan and 
debenture guarantees, and $1.8 billion in surety bond guarantees; for 
1996, $191 million in direct loans, $15.6 billion in loan and debenture 
guarantees, and $1.9 billion in surety bond guarantees; for 1997, $250 
million in direct loans, $19 billion in loan and debenture guarantees, 
and $2 billion in surety bond guarantees. The program levels and 
authorizations for each of the next 3 fiscal years are shown on the 
attached chart, which I have appended to my statement.
  While I am pleased with the funding levels provided for in the 
reauthorization bill, I want to emphasize this is no Government 
giveaway. Much of the funding represents, in percentage terms, a 
relatively small Government contribution which acts as a catalyst for 
billions of dollars in private sector investment in small business. The 
funding levels of the guarantee programs authorized in this bill will, 
in fact, make additional private funds available to small businesses 
far in excess of the funds authorized by Congress. For example, over 
the next 3 years, the bill authorizes $48 billion in guarantees of 
loans and debentures. As a result, another $20 billion in funds will be 
made available from private financial institutions, thus making a total 
of some $68 billion available to qualified small business borrowers.
  Second, the reauthorization bill includes a number of initiatives to 
enhance the development and growth of women-owned businesses, a key 
source of economic growth and new jobs. The legislation creates an 
Interagency Committee on Women's Business Enterprise, which would 
report on its activities to the President and Congress at least 
annually. Further, the bill restructures the current National Women's 
Business Council, ensuring broader representation and greater diversity 
among council participants in its role as an advisory body to the 
Interagency Committee, the President, the Congress. Finally, the 
legislation establishes by statute the Office of Women's Business 
Ownership at SBA, which currently exists under the authority of a 1974 
Executive order.
  As the author of the legislation which originally created the 
council, I have come to the conclusion that the Women's Business 
Council must have greater prominence, higher visibility, and more 
substantial input into the policymaking process if it is to achieve its 
goals. I believe the structure contained in this bill will ensure that 
prominence and visibility, maximize the use of existing resources, save 
valuable dollars, and create the true public-private partnership that 
is necessary if we are to make women's entrepreneurship--and the 
economic growth it can stimulate--a top policy priority.
  I have, in working closely with the administration, women's groups, 
and several other members of the House and Senate committees on a 
bipartisan basis, crafted this restructured council to continue the 
vital work it was doing to promote the development of women owned and 
run small businesses in a more efficient and cost effective manner.
  Third, the reauthorization bill provides relief to participants in 
three programs--the 503 development company program, the small business 
investment company program and the specialized small business 
investment company program--who are paying interest rates well above 
market rates. The high interest rates, as high as 15 percent, resulted 
from the interest rates in effect when the financing originated.
  Due to exorbitant prepayment penalties, these program participants 
are currently precluded from prepaying these loans now held by the 
Government, even though refinancing is something the participants could 
readily do in a private sector transaction. The bill authorizes $30 
million for 1995--dollars which have already been appropriated by 
Congress--plus the proceeds collected from a graduated prepayment 
penalty, to reduce the interest rates of any interested program 
participants.
  I had successfully proposed prepayment legislation which was passed 
in previous years, but the opposition of previous administrations 
blocked enactment. This year, the Clinton administration has endorsed 
prepayment relief.
  Fourth, the legislation creates a new program which will increase the 
private sector role in the Certified Development Company [CDC] program 
and expedite the processing of loan applications. In recognition of the 
contribution and great success of the CDC program, this bill creates a 
more meaningful role for the CDC's by certifying qualified CDC's as 
premier certified lenders, and permitting them to expedite the 
processing of loan applications under this program. CDC's with 
outstanding credit histories at SBA would be selected to approve SBA 
guarantees without prior approval from the SBA. This program will 
reduce government redtape by allowing qualified low-risk borrowers to 
have their loans approved earlier.
  This new initiative will provide for greater efficiency and more 
private sector control and participation in the section 504 or 
development company loan program. This job creation and economic 
development program which I authored in 1980 has grown dramatically, 
presented negligible risk to the Government, and served communities and 
developing businesses well.
  The success of the CDC program has been phenomenal. As of October 17, 
1990, CDC's collectively reached the $1 billion mark in debenture 
approvals. Less than 3 years later, on May 13, 1993, the CDC program 
reached $2 billion. Currently, CDC's are approving over $1 billion per 
year. The CDC program has been responsible for hundreds of thousands of 
jobs, and the losses to date have been negligible, about one-half of 1 
percent. The premier certified lenders program will permit the rapid 
success, progress, and growth of the CDC program to continue, while 
minimizing both the administrative and program costs to the Agency.
  Fifth, the legislation substantially expands the microloan program, 
which has been so successful in providing small businesses with the 
very small loans which are too often unavailable from banks and other 
traditional lenders. The bill deletes the current limitations on the 
number of intermediaries, lenders per State and increase the lending 
limitation on an intermediary to $2.5 million, from $1,250,000.
  The SBA and all of its programs provide critical support to America's 
small businesses as they startup, expand, and create more jobs for more 
Americans. I look forward to working closely with both Philip Lader, 
who will be named as SBA's new administrator, and President Clinton in 
continuing to work to make the Agency and its programs more effective 
and efficient. The changes made by the reauthorization bill are a vital 
part of that effort.
  Before concluding, I want to thank all of my colleagues on the Small 
Business Committee for their contributions and cooperation, 
particularly my ranking minority member, Mrs. Meyers of Kansas.
  Mr. Speaker, this conference report was developed on a bipartisan 
basis. It is a bill deserving the support of every Member of this body 
and I urge its adoption.
  Mr. Speaker, I include for the Record the following table.

     CONFERENCE AGREEMENT--MAJOR SBA REAUTHORIZATION FUNDING LEVELS     
------------------------------------------------------------------------
                                                 Fiscal year--          
               Program               -----------------------------------
                                         1995        1996        1997   
------------------------------------------------------------------------
Handicapped direct loans............  10 million  11 million  12 million
Microloans (direct).................  120         180         250       
                                       million     million     million  
Microloans (technical assistance)...  45 million  65 million  98 million
7(a) loan guarantees................  9.15        10.5        13.1      
                                       billion     billion     billion  
Defense conversion loan guarantees..  2 billion   2.5         3 billion 
                                                   billion              
Microloan guarantees pilot..........  20 million  30 million  40 million
504/502 development companies.......  2.25        2.65        3.25      
                                       billion     billion     billion  
SBIC debenture guarantees...........  200         210         220       
                                       million     million     million  
SBIC participating securities.......  400         650         900       
                                       million     million     million  
SSBIC preferred stock...............  23 million  24 million  25 million
SSBIC debenture guarantees..........  44 million  46 million  48 million
Surety bond guarantees..............  1.8         1.9         2 billion 
                                       billion     billion              
------------------------------------------------------------------------

  Mrs. MEYERS of Kansas. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in strong support of the conference report on 
H.R. 4801, the Small Business Administration Reauthorization and 
Amendments Act of 1994. The conference managers have done an excellent 
job in a brief period of time of reporting out a fair, reasonable, and 
responsible bill. I appreciate the efforts of my colleagues in the 
House--Chairman LaFalce, Mr. Smith, Mr. Wyden and Mr. Baker, and our 
counterparts in the Senate in working to this swift and amicable 
resolution.
  I appreciate the chairman's excellent description of the bill and I 
will try not to duplicate his remarks except to highlight a few points 
I feel are exceptionally important. First, I am pleased that the 
conference report reflects the reduced authorization levels for the 
small business venture capital programs, as provided in the House bill 
by inclusion of the LaFalce-Meyers amendment. These lower levels 
reflect our desire to be cautious concerning future increases in the 
programs. Slowing the rate of growth in the Small Business Investment 
Co. [SBIC] and specialized SBIC programs will give the recent 
legislative changes Congress made time to take root. In addition, it 
will give initiatives taken by the administrator to correct program 
shortcomings the opportunity to work. These programs need to walk 
before they can run.
  The conference report also reflects an agreement regarding the 
establishment of an advisory council for the Specialized Small Business 
Investment Co. program. In response to language in the House bill 
directing the SBA to create an advisory council, the SBA has began 
forming a council similar to the blue ribbon panel formed in 1991 for 
study of the SBIC program. A letter to conferees from SBA deputy 
administrator, Cassandra Pulley, outlined issues for review by the 
advisory council and informed the conferees that the council would be 
named and operational by November 30, 1994. Given the fact that 
establishment of the advisory council is already underway, the 
conferees agreed that statutory language creating an advisory council 
was not necessary. However, the SBA should take note that conferees 
direct the advisory council to issue its report and recommendations to 
the Committees on Small Business no later than May 31, 1995.

  In addition, the report retains an innovative new program to aid very 
small businesses, an amendment originally offered in committee by Mr. 
Baker. This program will target SBA procurement assistance to those 
businesses with 15 or fewer employees and revenues of less than one 
million dollars.
  The conference has also adopted an amendment offered by Mr. 
Knollenberg to increase the authorization for the guarantee pilot in 
the microloan program. This provision will hopefully spur the banking 
community to offer SBA guaranteed loans to our microloan 
intermediaries, thereby reducing the overall cost of the program.
  Finally, the conference report contains language that I offered in 
our committee mark-up which I believe addresses one of the most 
pressing issues facing small business--government regulation. Section 
613 requires the SBA's Office of Advocacy to give Congress a 
comprehensive report on the Federal regulations, paperwork, and taxes 
affecting small business and their cumulative impact.
  Mr. Speaker, this is vital information. Too often we speak about the 
costs and burdens of overregulation, but I don't believe any of us 
really understand the enormity of the problem. This report will make it 
clear that our legislative work is not done in a vacuum, and will help 
identify some specific regulations, paperwork requirements, or taxes 
that work undue hardship on small business.
  Mr. Speaker, I urge my colleagues to support this conference report. 
It is a clean bill with no extraneous provisions and it represents an 
excellent bipartisan effort to help the Nation's small business 
community.

                              {time}  1950

  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. LaFALCE. Mr. Speaker, I have no further requests for time, I 
yield back the balance of my time, and I move the previous question on 
the conference report.
  The previous question was ordered.
  The conference report was agreed to.
  A motion to reconsider was laid on the table.

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