[Congressional Record Volume 155, Number 169 (Monday, November 16, 2009)]
[Senate]
[Pages S11388-S11389]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE:
  S. 2777. A bill to repeal the American Recovery Capital loan program 
of the Small Business Administration; to the Committee on Small 
Business and Entrepreneurship.
  Ms. SNOWE. Mr. President, the current recession has caused 
unemployment to balloon to 10.2 percent and with small businesses 
creating over \2/3\ of all net new jobs, the road to recovery leads 
through our Nation's small businesses. For this recovery to occur, we 
must ensure that our small businesses have access to affordable credit 
so that they can keep their doors open and start hiring some of the 
15.7 million Americans who are currently unemployed.
  The Senate Committee on Small Business and Entrepreneurship has been 
extremely active on this issue,

[[Page S11389]]

and I thank Chair Landrieu for her leadership. The Committee has held a 
series of hearings on the credit crunch, to explore topics from 
alternative sources of credit to what policies government can enact 
that will help small businesses create jobs and weather this recession. 
In these hearings, the one constant message we have heard is that small 
businesses need access to capital. This message is borne out by the 
most recent Federal Reserve's Senior Loan Officer Opinion Survey which 
shows that banks continue to tighten access to credit for small 
businesses--and have since the start of this recession.
  To help small businesses access credit I have introduced two bills, 
the 10 Steps for a Main Street Economic Recovery Act, and the Next 
Steps for a Main Street Economic Recovery Act, which contain provisions 
that would reduce fees for small business borrowers and lenders, allow 
refinancing of 7(a) and 504 loans; create a lender platform to give 
small business borrowers more lending options, and to increase the 
maximum amount borrowers can take out in 7(a), 504, and microloan loan 
sizes to give small businesses who have capital needs in excess of the 
Small Business Administration's current loan sizes more borrowing 
options.
  Many of the key provisions of my 10 steps bill were included in the 
American Recovery and Reinvestment Act, ARRA, most notably, fee 
reduction for 7(a) and 504 loans. This provision, along with increasing 
the guarantee rate on 7(a) loans to 90 percent, has been credited with 
increasing small business lending by over 70 percent since the passage 
of the ARRA. I was also pleased that President Obama recently announced 
his support for the loan limit increases in my Next Steps bill as a 
part of his plan to expand access to capital for small businesses.
  These provisions have helped cushion the shock of the credit crisis 
for small business borrowers; however, I am concerned with one 
provision which has not lived up to its initial promise.
  The American Recovery Capital, ARC, loan program was included in the 
American Recovery and Reinvestment Act as a result of a combined effort 
from both the Chairs and the Ranking Members of the House and Senate 
with the laudable goal of extending a lifeline to small business 
borrowers. The program allowed viable small businesses that were having 
difficulty paying their existing debts to access a 100 percent SBA-
guaranteed bank loan to repay these debts. These small business 
borrowers would receive payments for up to 6 months, and then have a 1-
year grace period before repayments on their ARC loan began.
  However, since its implementation in June, the ARC loan program has 
been plagued with difficulties, most notably, the Office of Management 
and Budget has estimated that based on the underwriting requirements 
put forth by the administration, 60 percent of borrowers utilizing this 
program may default on their loans.
  The ARC program was intended to assist viable small businesses that 
will be able to repay the loan, not to add additional debt to those who 
will not. Proper stewardship of taxpayer dollars demands that we put a 
stop to any Federal program which does not achieve its stated goals. 
ARC loans are one such program. My legislation immediately suspends the 
ARC loan program and returns all unobligated funds back to the 
Treasury.
  We must ensure that above all else, taxpayer funds are protected.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2777

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

     SECTION 1. REPEAL OF AMERICAN RECOVERY CAPITAL LOAN PROGRAM.

       (a) In General.--Section 506 of division A of the American 
     Recovery and Reinvestment Act of 2009 (Public Law 111-5; 123 
     Stat. 157) is repealed.
       (b) Return of Funds.--Any unobligated balances of the 
     amounts appropriated under the heading ``Business Loans 
     Program Account'' under the heading ``SMALL BUSINESS 
     ADMINISTRATION'' under title V of division A of the American 
     Recovery and Reinvestment Act of 2009 (Public Law 111-5; 123 
     Stat. 151) for loan subsidies and loan modifications for 
     loans to small business concerns authorized in section 506 of 
     division A of the American Recovery and Reinvestment Act of 
     2009 are rescinded.
       (c) Applicability.--Any loan guarantee under section 506 of 
     division A of the American Recovery and Reinvestment Act of 
     2009 entered into before the date of enactment of this Act, 
     shall remain in full force and effect under the terms, and 
     for the duration, of the loan guarantee.
                                 ______