[Congressional Record Volume 150, Number 44 (Thursday, April 1, 2004)]
[Senate]
[Page S3595]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  TEMPORARY EXTENSION OF PROGRAMS UNDER SMALL BUSINESS ACT AND SMALL 
                     BUSINESS EXTENSION ACT OF 1958

  Mr. FRIST. I ask unanimous consent that the Senate proceed to the 
immediate consideration of H.R. 4062, which is at the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report the bill by title.

       A bill (H.R. 4062) to provide for an additional temporary 
     extension of programs under the Small Business Act and the 
     Small Business Investment Act of 1958 through June 4, 2004, 
     and for other purposes.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. SNOWE. Mr. President, I rise to support passage of H.R. 4062, a 
bill that provides needed improvements to the Small Business 
Administration's largest business loan program, the ``Section 7(a)'' 
program, at no additional cost to the Government.
  The SBA's 7(a) loan program has proven that a small amount of 
government backing can greatly enhance private-sector financing for 
small businesses, and that the economic benefits reverberate throughout 
the economy at large. Small businesses create almost 75 percent of the 
net new jobs in the economy. The 7(a) program harnesses this power and 
has helped small businesses to create or retain nearly 2 million more 
jobs in the last five years.
  The program is so popular among small businesses that demand for 
program funds in the first few months of fiscal year 2004 suggests that 
requests for the entire year would far out-pace its available budget. 
As a result, in January 2004, the SBA shut the program down, and then 
re-opened it with a loan cap of $750,000--only 37.5 percent of the $2 
million maximum previously available. Faced with these restrictions, 
small businesses have urged Congress and the administration to improve 
funding opportunities for the rest of 2004.
  Together with my fellow Senators, colleagues in the House, and a 
large coalition of small businesses and lenders, we have worked for 
several months to construct a way to improve the program by allowing 
lenders to help alleviate the funding shortfall. This plan would 
benefit small businesses and lenders by allowing loans larger than 
$750,000, and by allowing ``piggyback'' loans, or by allowing financing 
packages with several portions. And again, we could do this without 
increasing Government expenditures.
  The bill would achieve these goals in three ways. First, lenders 
would return to the SBA a 0.25 percent, or one-quarter of one percent, 
fee on new loans under $150,000. Lenders are currently permitted to 
retain this amount from a borrower fee, of 1 percent, that lenders 
already collect and pass on to the SBA. For loans larger than $150,000, 
lenders already must pass the entire borrower fee on to the SBA; this 
change would make the treatment the same for all loan sizes. This 
proposal was first made by the SBA, as part of a larger plan the SBA 
submitted to Congress this year.
  Second, a lender fee on new loans would be increased from 0.25 
percent, one-quarter of one percent, to 0.36 percent. This fee cannot 
be passed on to small businesses.
  Third, lenders would be permitted to provide small businesses with 
``piggyback'' financing packages that include a 7(a) loan portion and a 
non-7(a), strictly commercial portion, if the lenders paid the normal 
fees on the 7(a) loan portion and a 0.70 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. H.R. 4062 
prohibits the non-7(a) portion of the financing from being larger than 
the 7(a) loan.
  The bill also extends to June 4, 2004, the authorization for several 
SBA programs that would otherwise expire on April 2, 2004, including 
the Preferred Surety Bond Program, the Small Disadvantaged Business 
Program, and the SBA's co-sponsorship authority. Finally, the bill 
extends to September 30, 2004, the authorization for the SBA's 
Certified Development Company program, also known as the 504 Loan 
Program.
  H.R. 4062 is very similar to legislation which I introduced in the 
Senate on March 10, S. 2193, the ``Small Business Loan Revitalization 
Act of 2004,'' which I was joined in sponsoring by 18 fellow Senators. 
That legislation was the result of months of hard work and negotiations 
with fellow Senators, colleagues in the House, small businesses, 
lenders, and the administration. I regret that S. 2193's provisions, 
such as its lower fees for lenders, and the increased debenture sizes 
for the 504 Loan Program which I recently added by amendment, are not 
being enacted today, but I am pleased that, according to the Small 
Business Administration's projections, H.R. 4062 at least achieves the 
goal of allowing the 7(a) program to operate without restriction 
through the remainder of this fiscal year.

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