[Congressional Record Volume 143, Number 106 (Thursday, July 24, 1997)]
[Extensions of Remarks]
[Page E1506]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            SMALL BUSINESS MICROLOAN PROGRAM IMPROVEMENT ACT

                                 ______
                                 

                        HON. JOHN ELIAS BALDACCI

                                of maine

                    in the house of representatives

                        Thursday, July 24, 1997

  Mr. BALDACCI. Mr. Speaker, in rural States such as Maine, small 
businesses are responsible for the large majority of economic growth 
and job creation. Approximately 99 percent of all businesses in Maine 
fall into the small business category, with a majority of those falling 
into the category of very small businesses, or microenterprises.
  Unfortunately, it's often difficult, if not impossible, for such 
businesses to get financing through traditional means because it's not 
feasible for private lenders to make such small loans. Also, because 
many microborrowers are either startup or growth phase businesses, they 
are often unable to meet a lender's collateral or credit requirements. 
In response to this problem, Congress authorized the SBA, in 1992, to 
start a demonstration project to address the capital and technical 
assistance needs of microenterprises. The program targets underserved 
startup and existing small business owners who have the capacity to 
operate a successful small business, but may not be able to access 
credit.
  While it has been a very successful and popular program, the 
authorization for this project ends on October 1. That is why I am 
introducing legislation today that will make the SBA's Microloan 
Demonstration Program permanent.
  The microloan program is a partnership between the SBA and nonprofit 
intermediaries. The SBA provides funding to intermediaries, who in turn 
provide financing and technical assistance to very small businesses. 
They also furnish them with grant funding to provide microborrowers 
with technical assistance to ensure the business succeeds and the loans 
are repaid. The intermediaries provide microborrowers with small loans 
of up to $25,000, as well as the technical assistance.
  The program is successful, and a fine example of cooperation between 
the government and private sector in efforts to help promising 
entrepreneurs. It is also low-risk for the Federal Government. 
According to a 1996 report from the SBA, they have made 182 loans to 
intermediaries totaling $68.9 million with no loss to the Federal 
Government.
  Maine has a very strong entrepreneurial spirit. Our economy is 
dependent on very small businesses and microenterprises. My legislation 
will ensure that many of the underserved startup and existing small 
business owners who have the capacity to operate a successful small 
business will have the opportunity to do so.

                          ____________________