[Congressional Record Volume 149, Number 27 (Thursday, February 13, 2003)]
[Extensions of Remarks]
[Page E227]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             IMPROVING CALCULATION OF FEDERAL SUBSIDY RATE

                                 ______
                                 

                               speech of

                         HON. JAMES R. LANGEVIN

                            of rhode island

                    in the house of representatives

                       Tuesday, February 11, 2003

  Mr. LANGEVIN. Mr. Speaker, I rise today in strong support of S. 141, 
and to commend Chairman Manzullo and Ranking Member Velazquez for their 
leadership in bringing this much needed legislation to the floor.
  Passage of S. 141 will be the first step in correcting the SBA 
lending problems plaguing our nation's small businesses. This measure 
encourages the Administration to use a 7(a) subsidy rate model that 
would more accurately reflect the true cost of the small business loan 
programs to the taxpayer. Specifically, it permits the Office of 
Management and Budget (OMB) and the Small Business Administration (SBA) 
to use a recently completed econometric model to calculate the credit 
subsidy rate for the 7(a) small business loan guarantee program.
  Once enacted into law, this measure will allow SBA's flagship loan 
program to meet the borrowing demands of our nation's small businesses. 
Without this legislation, the program would limit 7(a) loans to less 
than $5 billion for FY 2003. Currently, the 7(a) program is operating 
at a very reduced capacity, with a loan size cap of $500,000, to avoid 
exceeding the program limitations. According to a recent GAO study, the 
current model has also resulted in overcharges or taxes of $1.5 billion 
over the last 10 years. By limiting the 7(a) guaranteed small business 
loan program, we are unnecessarily restricting capital for America's 
small businesses to expand and create jobs.
  In 2002, this crucial program backed 51,666 loans worth over $12 
billion to small firms nationwide. Last year, 21 different financial 
institutions in Rhode Island approved 932 7(a) loans for a total of 
over $75 million to Rhode Island's small business community. In fact, 
7(a) loans make up nearly one-third of all long-term loans made to U.S. 
small businesses. This program is important to every small business in 
America and deserves our continued support.
  Small businesses are the backbone of Rhode Island's economy and 
account for more than 98 percent of the jobs in the state. As a proud 
member of the Committee on Small Business, I have been extremely 
concerned about the ability of small businesses to start and grow in 
the current economic climate. Now more than ever, Congress must support 
the growth of America's small businesses and help stimulate the real 
engine of this nation's economy. For these reasons, I rise in strong 
support of passage of S. 141 and urge my colleagues to support it as 
well.

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