[Congressional Record Volume 141, Number 154 (Friday, September 29, 1995)]
[House]
[Pages H9711-H9712]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




CONFERENCE REPORT ON S. 895, SMALL BUSINESS LENDING ENHANCEMENT ACT OF 
                                  1995

  Mrs. MEYERS of Kansas. Mr. Speaker, I ask unanimous consent that it 
be in order to immediately consider the conference report to accompany 
the Senate bill (S.895) to amend the Small Business Act to reduce the 
level of participation by the Small Business Administration in certain 
loans guaranteed by the administration, and for other purposes, that 
the conference report be considered as read, and that debate thereon be 
limited to 10 minutes, equally divided and controlled by the gentleman 
from Missouri [Mr. Skelton] and myself.
  The SPEAKER pro tempore (Mr. Everett). Is there objection to the 
request of the gentlewoman from Kansas?
  There was no objection.
  Mrs. MEYERS of Kansas. Mr. Speaker, pursuant to the unanimous consent 
request just agreed to, I call up the conference report on the Senate 
bill (S.895) to amend the Small Business Act to reduce the level of 
participation by the Small Business Administration in certain loans 
guaranteed by the administration, and for other purposes.
  The Clerk read the title of the Senate bill.
  The SPEAKER pro tempore. Pursuant to the unanimous-consent request, 
the conference report is considered as having been read.
  (For conference report and statement, see proceedings of the House of 
Thursday, September 28, 1995, at page H9638.)
  The SPEAKER pro tempore. Pursuant to the unanimous consent request, 
the gentlewoman from Kansas [Mrs. Meyers] will be recognized for 5 
minutes, and the gentleman from Missouri [Mr. Skelton] will be 
recognized for 5 minutes.
  The Chair recognizes the gentlewoman from Kansas [Mrs. Meyers].
  Mrs. MEYERS of Kansas. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of the conference report on S. 895, 
the Small Business Lending Enhancement Act of 1995. This report 
reflects a strong bipartisan effort to strengthen and reduce the cost 
of two of the Small Business Administration's most important lending 
programs, the 7(a) Guaranteed Loan Program and the 504 Certified 
Development Company Program. All of the conferees, and indeed, all of 
the Small Business Committee members in both Chambers recognized that 
we were faced with a difficult balancing act. The task we faced was to 
meet the mandate of reducing the cost of these vital programs without 
unduly penalizing the small business borrower. Not only have we 
accomplished this task, through a modest increase in fees, but we will 
be able to assist more small businesses with their capital needs with 
significantly fewer appropriated dollars.
  In the case of the 7(a) program, we have reduced its subsidy cost 
from $2.74 per hundred dollars of loan guaranteed down to $1.06, a 
reduction of approximately 60 percent. We have spilt the increase costs 
between the lender and the borrower. In addition, we have reduced the 
Government's risk by limiting the guarantee percentage to a maximum of 
75 percent for loans over $100,000, and a maximum of 80 percent for 
loans under $100,000. Private lending institutions will share a greater 
portion of the risk, insuring sound underwriting standards.
  Turning to the 504 Certified Development Company Program, which 
provides funding for real estate and capital asset acquisition--our 
bricks-and-mortar lending program, we have made it entirely self-
funding through the imposition of a one-eighth of a point interest rate 
increase. With a zero subsidy rate, no appropriated dollars will be 
required to operate this program.
  In addition, the conferees agreed to accept a provision from the 
Senate bill to extend the Preferred Surety Bond Guarantee Program. This 
program, which would expire at the end of this fiscal year without an 
extension, provides expedited service for small business contractors 
who need bonding to get contracts, and I am pleased that we are able to 
continue this much-needed program.

  While I don't intend to make lengthy remarks about legislation that 
is a model of bipartisan cooperation and so devoid of controversy, I 
would like to address an issue that was discussed at some length in our 
committee markup, but which was absent from both House and Senate 
bills. This issue is whether or not we should carve out an exception to 
the 75- and 80-percent guarantee levels for small business loans, and 
retain a 90-percent guarantee for the Export Working Capital Loan. I 
feel strongly, as I believe others in the House and in the other body 
feel, that a 90-percent guarantee is imprudent.
  The Small Business Administration and our committee's distinguished 
ranking member, Mr. LaFalce, argued that the SBA's Export Working 
Capital Loan Program had been harmonized with Ex-Im bank's program both 
carrying 90-percent Government guarantees, and that changing SBA's 
guarantee would cause great harm to these harmonization efforts. A 
majority of both the House and Senate Small Business Committee members 
did not agree, and no provision keeping the 90-percent guarantee was 
included either S. 895 or H.R. 2150, making it a nonconference item. 
However, in recognition of the fact that the guarantee rate for the 
SBA's export working capital loans will now be lower than Ex-Im's, the 
conferees have called for a study of the impact of the lower guarantee 
rate on small businesses in the export market. This study should help 
us assess whether or not the 90-percent guarantee is vital to these 
loans, or whether Ex-Im should consider bringing their guarantee rates 
in line with the SBA's, again creating a harmonized program.
  Mr. Speaker, this conference report is good for small business, good 
for the taxpayer, and, as I previously mentioned, a model of the 
bipartisan cooperation that traditionally graces the work of the Small 
Business Committee. I would like to thank our ranking member, Mr. 
LaFalce, in particular, for his efforts on this legislation, and I 
strongly urge the adoption of this important measure.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SKELTON. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. SKELTON asked and was given permission to revise and extend his 
remarks.)
  Mr. SKELTON. Mr. Speaker, I rise in support of the conference report 
on S. 895, the Small Business Lending Enhancement Act of 1995.
  The main purpose of this legislation is to adjust the fees and 
guaranty levels of two Small Business Administration loan programs--
steps I reluctantly agree to in order to make the insufficient 
appropriation level accorded these programs go as far as possible in 
meeting the credit needs of the small business community. Under current 
fee and percentage guarantee schedules, the SBA would only be able to 
approve a small percentage of the loan applications it anticipates 
receiving in the next fiscal year, given appropriation projections.
  Yes, reducing the percentage of an SBA loan which the Federal 
Government guarantees and raising the fees charged to the borrower and 
lender will lower the cost of the program to the Federal Government, 
but another price will be paid in the process. Smaller loans will be 
more expensive for the borrower and may mean that some small businesses 
will not be able to turn to this lender of last resort, the SBA 
Guaranty Program. These changes will also make the loans less 
profitable for lenders, which may mean that fewer of them will be 
willing to participate in this program and the options available to the 
small business person will lessen in this way also.

[[Page H 9712]]

  However, given the budget dollars we had to work with, there were no 
alternatives to fee increases and lower guarantees.
  I am also very disappointed that, although I believe there was fairly 
broad and bipartisan support for it, we were not able to agree on 
keeping the Export Working Capital Program at a guarantee rate of 90 
percent. After years of talking about the need to improve export 
assistance for small businesses and eliminate duplicate services, just 
last year the Congress approved an agreement worked out between the SBA 
and the Export-Import Bank wherein the SBA would guarantee export loans 
up to $750,000 at 90 percent and the Ex-Im Bank guarantee larger loans 
at 90 percent. We have now reduced the percentage the SBA will 
guarantee, making the loan seem riskier to lenders, many of whom are 
new to export financing and already extremely cautious about getting 
involved. I fear that in reducing the percentage guarantee of an export 
loan, we are truly hurting small businesses that are trying to export--
a short-sighted move in light of the importance of trade to our economy 
and the balance of trade figures which we regularly decry.
  I am pleased the conference report contains the Senate language 
charging the guarantee fee on the guaranteed amount, not the gross 
amount of the loan. In my view, the Government is simply not entitled 
to charge a fee on that portion of a loan which it is not guaranteeing 
and on which, therefore, it has no exposure.
  I am also happy that the legislation extends for 2 years the pilot 
Preferred Surety Bond Program. This program is desirable not only 
because it can be a quick and efficient means of getting funds to 
qualified borrowers, but also because it will inevitably be 
increasingly important to the SBA and small contractors that we 
delegate authority for program delivery to outside parties as a means 
of compensating for SBA personnel cutbacks.
  In closing, I would like to congratulate my colleague, Chairman 
Meyers, on successfully guiding her first conference report to the 
floor. We enjoyed a cooperative working relationship throughout the 
process and I stand here in support of the final product.

                              {time}  1515

  Mr. Speaker, I yield back the balance of my time.
  Mrs. MEYERS of Kansas. Mr. Speaker, I yield myself such time as I may 
consume. Mr. Speaker, I would thank the gentleman from Missouri for his 
support, and I do believe this had strong bipartisan support.
  Mr. Speaker, I would say that I think there was concern that we could 
not see our way to extending the export loans guarantee at 90 percent. 
I think a majority of our committee on both sides felt that a 90 
percent guarantee at this point in time was imprudent for the export 
loans. Since the Senate bill also did not include export loans at 90 
percent, it did make it a nonconferenceable item. That is why, since 
neither House had chosen to do that, it is not in the conference 
committee report.
  Mr. Speaker, this conference report is good for small business, good 
for the taxpayer, and, as I previously mentioned, a model of the 
bipartisan cooperation that traditionally graces the work of the Small 
Business Committee.
  Mr. Speaker, I would certainly like to thank our ranking member, the 
gentleman from New York [Mr. LaFalce], who could not be with us today, 
and certainly the gentleman from Missouri [Mr. Skelton] who is a very 
strong member of the committee, in particular for his efforts on this 
legislation.
  Mr. Speaker, I strongly urge the adoption of this important measure.
  Mr. Speaker, 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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