[Congressional Record Volume 160, Number 115 (Tuesday, July 22, 2014)]
[Senate]
[Pages S4707-S4708]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEVIN:
  S. 2637. A bill to modify the small business intermediary lending 
program; to the Committee on Small Business and Entrepreneurship.
  Mr. LEVIN. Mr. President, today I am introducing the Small Business 
Intermediary Lending Program Act of 2014.
  This bill would make permanent a successful small business financing 
program which provides startups and growing small businesses with 
access to capital. As a long-time member of the Small Business and 
Entrepreneurship Committee, I have been a strong supporter of efforts 
to help small firms expand and thrive so they can create jobs and grow 
the economy.
  The need for creative and effective ways to expand access to capital 
for small businesses is greater than ever. According to a study issued 
by the Brookings Institute in May, entrepreneurship is experiencing a 
troubling decline in the United States, a trend the authors document 
over the last 30 years, across all 50 States and almost all 
metropolitan areas. They conclude that we need to pursue policies that 
better foster entrepreneurship if we want to create more jobs.
  One way we can foster entrepreneurship and address the lingering 
unemployment affecting so many of our communities is to make permanent 
the Small Business Intermediary Lending Pilot Program.
  I proposed and helped enact the Intermediary Lending Pilot Program 
into law in 2010. Over the last three years, the program has provided 
loans of $1 million to nonprofit intermediary lenders to make small to 
mid-sized loans to small businesses. The program gets financing to 
small businesses that are not being served by banks or conventional 
loan programs currently available through the Small Business 
Administration. Small businesses seeking this flexible debt financing 
may have graduated from the Small Business Administration's Microloan 
Program, and for a variety of reasons, especially lack of adequate 
collateral, do not qualify for guaranteed 7(a) loans or other private 
capital.
  Given the slow economic recovery, high demand exists for the 
Intermediary Lending Pilot Program. In the short life of the program, 
intermediaries in 20 States across the country have already made more 
than 300 small business loans, totaling more than $26 million. If not 
for the Intermediary Lending Pilot Program, the small businesses 
receiving these loans would have been hard-pressed to find this 
financing elsewhere. Almost 90 percent of the loans were in the 
$50,000-$200,000 range, making these loans larger than microloans. The 
average loan size in the pilot has been about $88,000.
  The loans facilitated by the Intermediary Lending Program have done 
more than help small businesses; they have created or retained 
thousands of jobs. Building on this success and keeping the program 
going will strengthen our economy, get small businesses sorely-needed 
capital, and catalyze job creation.
  Merit Hall, a full service staffing firm located in downtown Detroit, 
provides services and staffing to construction, landscape and facility 
maintenance contractors throughout southeastern Michigan. In 2013, 
Merit Hall received a $200,000 ILP loan to support the company's 
growth. Merit Hall used those funds to retain and create 10 office jobs 
and 300 jobs in the field. In addition, this loan allowed Merit Hall to 
grow their revenues to the point where they were bankable and were able 
to receive a $350,000 loan from a commercial bank and pay off their ILP 
loan.
  Rubber Technologies of Coleman, Michigan, recycles tires to create 
premium recycled products such as playground surfacing and rubber mats. 
The Intermediary Lending Program loan they received will help 
strengthen their business, allowing them to add

[[Page S4708]]

equipment and retain 12 jobs. Roaming Harvest, a small business in 
Traverse City, Michigan, started out as a food truck and now thanks to 
a loan from the Intermediary Pilot program has opened a cafe featuring 
local food, retaining two jobs and creating two new jobs.
  These small loans can add up. An intermediary lender in the state of 
Washington, Craft3, has already made 34 loans through the program and 
created 98 jobs as a result.
  Intermediary lenders do more than provide loans; they provide 
technical assistance and counseling which often does not accompany 
conventional loans, helping business owners start and grow successful 
enterprises.
  The Intermediary Lending Program is modeled after the U.S. Department 
of Agriculture's Rural Development Loan Program, which has existed 
since 1988. Like the USDA program, this SBA counterpart is a 
decentralized initiative relying on the capacity and market expertise 
of local, nonprofit intermediary lenders, but it expands this approach, 
serving both rural and urban areas.
  The legislation I am introducing today makes the Intermediary Lending 
Program permanent and authorizes a funding level of $20 million for 
each of the next three fiscal years. The legislation authorizes 
nonprofit lending intermediaries, chosen on a competitive basis, to 
participate in the program. As in the pilot, each intermediary will 
receive a loan of up to $1 million at a low interest rate to create a 
revolving loan fund through which they will make small business loans.
  The nonprofit lenders who participate in this program already tap a 
variety of financing programs to meet the needs of the small businesses 
in their states and localities. SBA has observed that one of the 
benefits of the Intermediary Lending Program as compared to the 
Microloan Program is the longer repayment term, 20 years versus 10 
years, respectively. This patient capital helps to facilitate larger 
loans that some businesses need, up to $200,000, and it allows the 
revolving loan fund to revolve about 2.5 times before the intermediary 
fully repays the initial SBA loan.
  In addition to authorizing the program, this bill makes a technical 
correction to the language of the pilot program. While the pilot 
program limited the amount that an intermediary can borrow under the 
Intermediary Lending Program to $1 million, it did not intend to take 
into account money an intermediary borrowed through other SBA programs. 
Unfortunately, SBA interpreted the language in a way that placed an 
overall cap on how much a participating intermediary can borrow from 
the SBA under all SBA programs. The result was that more experienced 
lenders with higher loan volumes, especially many strong microlenders, 
were unable to participate. That was simply not the intent of Congress. 
Rather, this program was designed to complement the microloan and 7(a) 
programs and add another tool to the portfolio of nonprofit community-
based lenders. The bill I am introducing today changes the language to 
clarify our intent, maintains the $1 million loan limit, and increases 
the overall amount intermediaries can have outstanding from SBA under 
the Intermediary Lending Program to $5 million.
  The Intermediary Lending Program is a small program which has already 
made a big difference. It is modeled on a program which has been 
operating successfully for almost 30 years, and it shields the 
government from any risks involved in lending to small businesses by 
having experienced intermediaries take on that risk. As we all look for 
ways to bolster our economy, we should build on this record of success. 
The Intermediary Lending Pilot is addressing a lending gap and helping 
create jobs across the nation. If we adopt my legislation, this program 
will continue to be an engine for small business growth. I urge its 
swift enactment.
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