[Congressional Record Volume 150, Number 30 (Wednesday, March 10, 2004)]
[Senate]
[Pages S2559-S2561]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself and Mr. Bond):
  S. 2193. A bill to improve small business loan programs, and for 
other purposes; to the Committee on Small Business and 
Entrepreneurship.
  Ms. SNOWE. Mr. President, I rise to introduce a bill to revitalize a 
loan program crucial to the growth of small businesses in this country, 
and therefore crucial to our country's economy. This bill, the ``Smart 
Business Loan Revitalization Act of 2004,'' provides improvements to 
the Small Business Administration's largest business loan program, the 
``Section 7(a)'' program.
  This program proves that a small amount of government backing can 
greatly enhance private-sector financing for small businesses, and that 
the economic benefits can reverberate throughout the economy at large. 
More than $46.6 billion in 7(a) loans have been provided to small 
businesses over the last five Fiscal Years. This financing has helped 
small businesses to create or retain nearly 2 million more jobs over 
this five-year period.
  Today, we are losing thousands of American jobs to outsourcing and 
off-shore manufacturing. We measure net job increases in the ``few 
thousands.'' Given these circumstances, it is clearly to our advantage, 
and to the advantage

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of the American people, to support improvements to any program that has 
already demonstrated an ability to create or retain nearly 400,000 
American jobs a year.
  Last year this program provided $11.2 billion in loans to small 
business owners and employees in towns and communities across America. 
This year, however, the SBA only requested a program size of $9.3 
billion. The fact that the SBA received a larger appropriation than the 
$9.3 billion it requested is powerful testament to the popularity of 
this program among small businesses. The SBA received sufficient 
appropriations, $79 million, coupled with $22 million in carried-over 
funds, to allow for a $9.55 billion program.
  Like last year, however, the demand for program funds in the first 
few months of Fiscal Year 2004 suggested that requests for the entire 
year would most likely exceed $11 billion. As a result, in January, 
2004, the SBA shut the program down, and then reopened it with a 
diminished loan cap of $750,000--37.5 percent of the $2 million maximum 
previously available. Faced with these restrictions, small businesses 
have urged Congress and the Administration to make the program fully 
operational for the rest of 2004.
  To this end, I have worked with a coalition of small businesses and 
lenders to construct a plan to improve the program for the remainder of 
this Fiscal Year. The plan would allow lenders to help alleviate the 
funding shortfall. It would benefit small businesses and lenders by 
allowing loans larger than $750,000, and by allowing loans with 
multiple participations.
  The bill would achieve these goals in three ways. First, lenders 
would return to the SBA a fee of 0.25 percent (or one-quarter of one 
percent) of new loans under $150,000, a fee that lenders are currently 
permitted to retain. Lenders may only retain this fee for loans of 
$150,000 or less--for loans greater than that size, lenders must return 
the fee to the SBA, as they have been required to do since the 
inception of the program. This proposal was first made by the SBA, as 
part of a larger plan the SBA recently submitted to Congress.
  Second, a lender fee on new loans would be increased from 0.25 
percent, one-quarter of one percent, to 0.35 percent. Finally, lenders 
would be permitted to provide small businesses with financing packages 
that include a 7(a) loan portion and a non-7(a), a strictly commercial 
portion, if the lenders paid the normal fees on the 7(a) loan portion 
and a 0.50 percent fee on the non-7(a) portion. Prior to January 2004, 
the SBA permitted this type of financing, but without receiving any fee 
income for the non-7(a) portion, and without an upper limit on the 
total financing, which I have set at $4 million.
  The ability of small businesses to receive loans larger than $750,000 
is a prerequisite to reviving the American economy. These loans provide 
needed capital for significant purchases and development by small 
businesses. More 7(a) loans represent longer-term loans than similar 
products available in the private capital market, and this allows small 
businesses to repay their 7(a) loans more gradually. I applaud the SBA 
for its desire to make more small loans to entrepreneurs without large 
capital needs, but I also urge the SBA to remember those entrepreneurs 
and small businesses who need more financing to strengthen and grow 
their enterprise, and to hire more employees. After encouraging 
entrepreneurs to start new small businesses, we cannot afford to forget 
their small businesses, or profess an inability to assist them when 
they need additional financing to grow.
  The benefits of this program are clear. It has the ability to help 
entrepreneurs to create jobs, to fulfill their dreams, and to support 
their families--all of this while building the kinds of energetic 
businesses our economy so desperately needs. The demands for this 
program is also clear. Small businesses have submitted more 
applications than the program could handle so far this year. The 
willingness of lenders to pay increased fees to meet the demand from 
small businesses for 7(a) loans is clear evidence the program works and 
remains attractive to lenders.
  The question we must answer now is whether we are willing to respond 
to small businesses and lenders and implement a solution which they 
have asked for, and which promises dividends for all involved, or 
whether we will ignore their requests, and miss an opportunity to 
transform a loan program that sustains almost 400,000 jobs a year into 
an initiative capable of creating two, three, four or even five times 
that amount. I don't want to miss that opportunity, my constituents in 
Maine can't afford to miss that opportunity, and I don't believe that 
your constituents can either. Almost every company listed today on the 
American Stock Exchange began as a small business. In the short term, 
this bill may save American jobs. But in the long term, it may save the 
American economy.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2193

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Loan 
     Revitalization Act'' .

     SEC. 2. COMBINATION FINANCING.

       (a) In General.--Section 7(a) of the Small Business Act (15 
     U.S.C. 636(a)) is amended by adding at the end the following:
       ``(31) Combination financing.--
       ``(A) Definitions.--In this paragraph--
       ``(i) the term `combination financing' means financing 
     comprised of a loan guaranteed under this subsection and a 
     commercial loan; and
       ``(ii) the term `commercial loan' means a loan of which no 
     portion is guaranteed by the Federal government.
       ``(B) Application.--A loan guarantee under this subsection 
     on behalf of a small business concern, which is approved 
     within 120 days of the date on which a commercial loan is 
     obtained by the same small business concern, shall be subject 
     to the provisions of this paragraph.
       ``(C) Commercial loan amount.--A small business concern 
     shall not be eligible to receive combination financing under 
     this paragraph unless the commercial loan obtained by the 
     small business concern does not exceed $2,000,000.
       ``(D) Commercial loan provisions.--The commercial loan 
     obtained by the small business concern--
       ``(i) may be made by the participating lender that is 
     providing financing under this subsection or by a different 
     lender;
       ``(ii) may be secured by a senior lien; and
       ``(iii) may be made by a lender in the Preferred Lenders 
     Program, if applicable.
       ``(E) Commercial loan fee.--A one-time fee in an amount 
     equal to 0.5 percent of the amount of the commercial loan 
     shall be paid by the lender to the Administration if the 
     commercial loan has a senior credit position to that of the 
     loan guaranteed under this subsection. All proceeds from the 
     loan guaranteed under this subsection shall be used to offset 
     the cost (as defined in section 502 of the Credit Reform Act 
     of 1990) to the Administration of guaranteeing loans under 
     this subsection.
       ``(F) Deferred participation loan eligibility.--
       ``(i) Maximum amount.--A small business concern may not 
     receive combination financing under this paragraph in an 
     amount greater than $4,000,000.
       ``(ii) Net amount.--The net amount of the deferred 
     participation share shall not exceed the maximum amount of a 
     net guarantee provided under paragraph (3)(A).
       ``(G) Deferred participation loan security.--A loan 
     guaranteed under this subsection may be secured by a 
     subordinated lien.
       ``(H) Availability.--Combination financing shall be 
     available under this paragraph notwithstanding any maximum 
     limitation on loans imposed by the Administration.''.
       (b) Sunset Date.--The amendment made by subsection (a) 
     shall take effect on the first day after the date of 
     enactment of this Act and is repealed on October 1, 2004.

     SEC. 3. LOAN GUARANTEE FEES.

       (a) In General.--Section 7(a) of the Small Business Act (15 
     U.S.C. 636(a)) is amended--
       (1) in paragraph (18)(B), by adding at the end the 
     following: ``This subparagraph shall not apply to any loan 
     approved during the period beginning on the first day after 
     the date of enactment of paragraph (23)(A)(iii) and ending on 
     September 30, 2004.''; and
       (2) in paragraph (23), by amending subparagraph (A) to read 
     as follows:
       ``(A) Percentage.--
       ``(i) In general.--With respect to each loan guaranteed 
     under this subsection, the Administrator shall, in accordance 
     with such terms and procedures as the Administrator shall 
     establish by regulation, assess and collect an annual fee in 
     an amount equal to 0.5 percent of the outstanding balance of 
     the deferred participation share of the loan.
       ``(ii) First temporary percentage.--With respect to loans 
     approved during the period beginning on October 1, 2002 and 
     ending on the date of enactment of this clause, the annual 
     fee assessed and collected under clause (i) shall be equal to 
     0.25 percent of the outstanding balance of the deferred 
     participation share of the loan.

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       ``(iii) Second temporary percentage.--During the period 
     beginning on the first day after the date of enactment of 
     this clause and ending on September 30, 2004, the annual fee 
     assessed and collected under clause (i) shall be equal to 
     0.35 percent of the outstanding balance of the deferred 
     participation share of the loan.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on the first day after the date of 
     enactment of this Act and are repealed on October 1, 2004.

     SEC. 4. RECONSIDERATION OF LOAN APPLICATIONS REJECTED BASED 
                   ON LOAN AMOUNT.

       (a) Consideration of Loan Application Submitted Before 
     January 8, 2004.--Beginning on the first day after the date 
     of enactment of this Act, the Small Business Administration 
     shall reconsider any application submitted on or after 
     December 23, 2003 and before January 8, 2004, under section 
     7(a) of the Small Business Act (15 U.S.C. 636(a)) that was 
     rejected based on the loan amount requested before 
     considering any other application if the applicant is 
     otherwise eligible for financial assistance under that 
     section.
       (b) Export Working Capital.--Any small business that 
     received financing under section 7(a)(14) of the Small 
     Business Act (15 U.S.C. 636(a)(14)) before January 1, 2004, 
     and requests a renewal of such financing, shall have their 
     request approved regardless of the size of such financing 
     (subject to the limitations in section 7(a)(3) of such Act) 
     if the small business is otherwise eligible for such 
     financing under that section.
       (c) Maximum Loan Amount.--Ten days after the date of 
     enactment of this Act, the Small Business Administration 
     shall allow loans under section 7 of the Small Business Act 
     (15 U.S.C. 636) up to the maximum amount permitted under the 
     Small Business Act.

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