[Congressional Record Volume 150, Number 30 (Wednesday, March 10, 2004)]
[Senate]
[Pages S2540-S2541]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           SBA EMERGENCY AUTHORIZATION EXTENSION ACT OF 2004

  Mr. KERRY. Madam President, yesterday I introduced a bill, S. 2186, 
to keep the SBA, its two largest lending programs, the 504 and 7(a) 
Loan Guarantee Programs, and the Women's Business Centers up and 
running through the remainder of this year, September 30, 2004. I ask 
unanimous consent that a letter of support from the trade association 
of 7(a) lenders, the National Association of Government Guaranteed 
Lenders, be printed in the Record. Along with NAGGL, I thank the 
American Bankers Association, the Independent Community Bankers of 
America, U.S. Chamber of Commerce, and the many other small business 
associations, that have helped us find solutions, demonstrating great 
cooperation in a difficult position, to help small businesses.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                           National Association of


                                Government Guaranteed Lenders,

                                   Stillwater, OK, March 10, 2004.
     Re SBA 7(a) Funding Crisis and S. 2186.

     Hon. John F. Kerry,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Kerry: As Congress considers how to solve the 
     ongoing SBA 7(a) program funding crisis, we are writing to 
     express our support for S. 2186, which includes provisions 
     that both Small Business Committees and the 7(a) industry 
     have already agreed are equitable.
       While NAGGL is generally opposed to programmatic fee 
     increases, the 2004 budget for the 7(a) program has made his 
     concession necessary. NAGGL testified in 2003 that 2004 
     program demand would be nearly $12 billion, but the 
     Administration adamantly disagreed with our estimate, 
     providing program level

[[Page S2541]]

     of only $9.5 billion. The Administration has also failed to 
     reprogram any additional money to the 7(a) program or offer a 
     supplemental appropriations request.
       As a result, the SBA's flagship 7(a) loan program, the 
     single largest provider of long-term start-up and expansion 
     loans to American's small businesses, has been crippled since 
     the beginning of this fiscal year, when the SBA temporarily 
     shut it down due to a funding shortfall. When the Agency 
     reopened the program a week later, it implemented an 
     artificial loan cap of $750,000--a reduction of more than 50% 
     of the program's statutory loan limit of $2 million--and a 
     prohibition on piggyback loans, which would have allowed 
     lenders to make loans in excess of a loan cap.
       Businesses who had already submitted applications for loans 
     in excess of the new cap were then told their deals would not 
     qualify for the program. These applicants had gone through 
     months of financial planning and had been promised their 
     loans would be approved. Many had already begun purchasing 
     equipment and hiring employees. And if their deals don't get 
     done, many will lose earnest money they had taken from 
     personal savings and retirement plans to inject into these 
     loans.
       Other potential applicants who would ordinarily qualify for 
     the 7(a) program have since been told there is no alternative 
     to finance their start-up or expansion. The net result 
     to these small businesses is a loss of faith in the U.S. 
     government. The net result to the economy is a loss of 
     jobs.
       The provisions of S. 2186 fix this problem, and the bill 
     has NAGGL's full support. As the trade association 
     representing lenders who make over 80% of loans in the 7(a) 
     program every year, we can attest to the fact that the 
     minimal fee increases in S. 2186 are ones that lenders will 
     pay and will not be passed along to borrowers. We also 
     continue to oppose the SBA's legislative proposal to reduce 
     the guarantee on all 7(a) loans to 50% and allow the 
     legislation that provided for lender and borrower fee 
     decreases through the end of this fiscal year to simply 
     sunset.
       Without the provisions of S. 2186, $3 billion in loans will 
     remain unavailable to small businesses for the remainder of 
     FY 2004--a net loss of approximately 90,000 jobs. We also 
     fear that if a swift and equitable solution is not enacted, 
     many 7(a) lenders will flee the program, leaving a void in 
     availability of the long-term financing that is so crucial to 
     small businesses' success. This will be occurring at a time 
     when our economy is in desperate need of a shot in the arm.
       We request that you press for swift passage of S. 2186 to 
     bolster economic recovery and the small businesses that can 
     drive it. Thank you in advance for your consideration.
           Sincerely,
                                                   Tony Wilkinson,
     President & CEO, NAGGL.

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