[Congressional Record Volume 157, Number 190 (Monday, December 12, 2011)]
[Extensions of Remarks]
[Page E2228]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  INTRODUCING THE INVESTING IN AMERICA'S SMALL BUSINESSES ACT OF 2011

                                 ______
                                 

                        HON. CAROLYN B. MALONEY

                              of new york

                    in the house of representatives

                       Monday, December 12, 2011

  Mrs. MALONEY. Mr. Speaker, I rise today to introduce the Investing in 
America's Small Businesses Act of 2011, or the ``Micro Biz'' Bill.
  This bill fills an important need in this country to advance the 
practice of microlending to small start ups, and because it allows 
Community Development Financial Institutions (CDFIs) to do more of the 
great work that they already do.
  This bill will expand a vital source of seed money for entrepreneurs 
who don't have access to bank loans. The billion-dollar corporation 
that began in a dorm room or a garage is no urban myth, as the 
employees of Facebook and Hewlett-Packard can tell you, but the Great 
Recession has made it harder than ever for entrepreneurs to access 
credit. It's my hope that this ``micro biz'' bill will be a bridge not 
only to vital financing for entrepreneurs, but also to a brighter 
economic future for our country.
  Indeed, we in Congress talk quite often about the need to create 
jobs. And even with the unemployment rate falling to 8.6% from a high 
of 9.2%, our economic recovery is slower than all of us would like. So 
the goal of my bill is to get to the heart of job creation, the small 
business--and more specifically, the small startup. And because I think 
this is a goal that even big business should share, a critical 
component of the bill is to foster public private partnerships. I have 
focused on CDFIs because they are on the ground every day financing 
projects, lending to small businesses, and engaging in economic 
development in underserved areas.
  My bill will provide grants to CDFIs to create or enhance their loan-
loss reserves so they can either begin to do micro lending or so they 
can do more of it. Loan-loss reserves are critical for institutions to 
be able to extend loans and for corporations to partner with them. 
Loan-loss reserves cover the institution in the case of a loan default 
but also allow the institution to be in the ``first loss'' position. 
So, if a larger institution or corporation wants to partner with them, 
the loan-loss reserve ensures that the CDFI, not the larger institution 
or corporation, will be on the hook should the loan default. I should 
note, though, that historically, loans in this category through the 
CDFI's have a very low loan default rate--just 3% in the first quarter 
of 2011. But the loan-loss reserve provides critical protections for 
CDFIs and their partners.
  The bill also provides grants for technical assistance so that CDFIs 
can engage with small businesses and help them get off the ground. 
Loans made through this program must be under $25,000 and the CDFI must 
be able to match the grant by 50%. Most importantly, for every dollar 
of public money, the CDFIs can leverage six dollars of private money.
  I believe this bill is essential to helping CDFIs create new 
financial products and services that are appropriate and accessible for 
millions of American small businesses that do not have access to the 
financial mainstream.
  Often we are talking about a young Steve Jobs who invents the first 
computer in his basement but needs startup capital to get it out there. 
Unfortunately most entrepreneurs aren't Steve Jobs and need loans to 
get their ideas off the ground. But if they do, they grow, they take on 
a partner and business takes off from there. Job creation flows from 
that first loan.
  That is exactly what this bill is about and why I think it is so 
important. It is not a comprehensive solution, but it is a way to get 
money out there to small business and support job creation from the 
ground up.
  I urge my colleagues to join me in supporting this important 
legislation.

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