[Congressional Record Volume 163, Number 124 (Monday, July 24, 2017)]
[House]
[Pages H6179-H6181]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  MICROLOAN MODERNIZATION ACT OF 2017

  Mr. CHABOT. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 2056) to amend the Small Business Act to provide for 
expanded participation in the microloan program, and for other 
purposes, as amended.
  The Clerk read the title of the bill.

[[Page H6180]]

  The text of the bill is as follows:

                               H.R. 2056

       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 ``Microloan Modernization Act 
     of 2017''.

     SEC. 2. DEFINITIONS.

       In this Act--
       (1) the term ``intermediary'' has the meaning given that 
     term in section 7(m)(11) of the Small Business Act (15 U.S.C. 
     636(m)(11)); and
       (2) the term ``microloan program'' means the program 
     established under section 7(m) of the Small Business Act (15 
     U.S.C. 636(m)).

     SEC. 3. MICROLOAN INTERMEDIARY LENDING LIMIT INCREASED.

       Section 7(m)(3)(C) of the Small Business Act (15 U.S.C. 
     636(m)(3)(C)) is amended by striking ``$5,000,000'' and 
     inserting ``$6,000,000''.

     SEC. 4. MICROLOAN TECHNICAL ASSISTANCE.

       Section 7(m)(4)(E) of the Small Business Act (15 U.S.C. 
     636(m)(4)(E)) is amended by striking ``25 percent'' each 
     place such term appears and inserting ``50 percent''.

     SEC. 5. SBA STUDY OF MICROENTERPRISE PARTICIPATION.

       Not later than 1 year after the date of enactment of this 
     Act, the Administrator of the Small Business Administration 
     shall conduct a study and submit to the Committee on Small 
     Business and Entrepreneurship of the Senate and the Committee 
     on Small Business of the House of Representatives a report 
     on--
       (1) the operations (including services provided, structure, 
     size, and area of operation) of a representative sample of--
       (A) intermediaries that are eligible to participate in the 
     microloan program and that do participate; and
       (B) intermediaries that are eligible to participate in the 
     microloan program and that do not participate;
       (2) the reasons why eligible intermediaries described in 
     paragraph (1)(B) choose not to participate in the microloan 
     program;
       (3) recommendations on how to encourage increased 
     participation in the microloan program by eligible 
     intermediaries described in paragraph (1)(B); and
       (4) recommendations on how to decrease the costs associated 
     with participation in the microloan program for eligible 
     intermediaries.

     SEC. 6. GAO STUDY ON MICROLOAN INTERMEDIARY PRACTICES.

       Not later than 1 year after the date of enactment of this 
     Act, the Comptroller General of the United States shall 
     submit to the Committee on Small Business and 
     Entrepreneurship of the Senate and the Committee on Small 
     Business of the House of Representatives a report 
     evaluating--
       (1) oversight of the microloan program by the Small 
     Business Administration, including oversight of 
     intermediaries participating in the microloan program; and
       (2) the specific processes used by the Small Business 
     Administration to ensure--
       (A) compliance by intermediaries participating in the 
     microloan program; and
       (B) the overall performance of the microloan program.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Ohio (Mr. Chabot) and the gentlewoman from California (Ms. Judy Chu) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Ohio.


                             General Leave

  Mr. CHABOT. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days to revise and extend their remarks and include 
extraneous material on the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. CHABOT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the microloan program at the Small Business 
Administration is a program that acutely targets small dollar borrowers 
by utilizing nonprofit intermediaries known as microlenders.
  Beyond lending the needed capital that is critical to a small 
business, microlenders are required to provide technical assistance and 
training to borrowers and perspective borrowers.
  The program is unique to the SBA's capital access programs because it 
combines capital with counseling, two ingredients for growth. However, 
like many Federal programs, it is in need of modernizing to fully meet 
the demands of America's small businesses.
  H.R. 2056, the Microloan Modernization Act of 2017, does just that.
  To fully service small dollar borrowers, H.R. 2056 raises the lending 
volume a microloan intermediary has at its disposal from $5 million to 
$6 million.
  Next, the legislation provides flexibility to the outdated and 
antiquated 25/75 rule that limits the amount of preloan technical 
assistance a microloan intermediary can offer to their small business 
clients.
  By updating the rule to a 50/50 split, more complete assistance can 
be offered in the early stages of the process, oftentimes, when a small 
business needs it the most.
  To determine if the program is running at its full potential with 
microlenders throughout the Nation, H.R. 2056 also directs the SBA to 
study the utilization of the program.
  Lastly, to make sure the SBA is providing the correct amount of 
supervision, the Government Accountability Office, the GAO, is required 
to study the SBA's oversight tools.
  As we continue to see signs of economic improvement, we must 
steadfastly defend the Nation's small businesses and startups. H.R. 
2056 makes important changes to the program that will enhance a small 
dollar borrower's ability to grow and create jobs.
  I want to thank the gentlewoman from Florida (Mrs. Murphy) and all 
the members on this committee who have taken a leading role in this 
legislation. It has broad bipartisan support--again, the Small Business 
Committee working in a bipartisan fashion.
  Mr. Speaker, I urge my colleagues to vote ``yes'' on H.R. 2056, and I 
reserve the balance of my time.

                              {time}  1630

  Ms. JUDY CHU of California. Mr. Speaker, I yield myself as much time 
as I may consume.
  Mr. Speaker, I rise in support of H.R. 2056, the Microloan 
Modernization Act of 2017. This bill comes at an important time, 
because the nature of small business financing has evolved. No longer 
do many banks want to take on a business loan under $250,000, leaving 
much of the Nation's small employers empty-handed.
  Small entities don't always want or need large amounts of capital, 
and find small loans sufficient to meet their needs, or they lack the 
qualifications necessary to qualify for a bank loan. The SBA's 
Microloan program helps fill this gap by serving entrepreneurs who are 
not served by the private sector or SBA's 7(a) loan program.
  This program has provided millions of dollars in financing and 
technical assistance to small businesses and entrepreneurs since its 
inception in 1992. By providing loans to nonprofit intermediaries who, 
in turn, lend funds to the smallest of small businesses, the program 
helps borrowers streamline their operations, grow to profitability, and 
create new jobs.
  Microloans have proven to be incredibly valuable to prospective 
entrepreneurs and to communities who badly need greater economic 
opportunities. Despite the average microloan size being about $13,000, 
these loans have changed the face of small business lending and how 
small companies are funding their success.
  H.R. 2056 offers a much-needed change by increasing the microloan 
intermediary loan limit from $5 million to $6 million. It also raises 
the cap on grant funds that intermediaries can spend on technical 
assistance for prospective borrowers.
  Microloans are labor intensive and require staff time, expense, and 
risk. Technical assistance grants allows intermediaries to support 
personalized and intensive technical assistance for those 
microborrowers in their portfolio. Raising the cap will better serve 
potential business borrowers by ensuring they are ready for that next 
step: taking on a loan.
  These changes will increase the reach of the program and will 
ultimately go a long way toward creating opportunity for established 
enterprises and those who dream of going into business for themselves.
  I strongly urge my colleagues to support this important bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Nebraska (Mr. Bacon).
  Mr. BACON. Mr. Speaker, I rise today in support of the Microloan 
Modernization Act of 2017. This legislation will benefit America's 
small businesses by improving the Small Business Administration's 
Microloan program.
  Small business lending has not kept pace with the improving economy 
after the Great Recession, and this has been especially true for small-
dollar borrowers.
  Early stage small businesses do not have the proven financial history 
and

[[Page H6181]]

lack access to traditional lending. Unable to borrow money from banks 
and credit unions, they often turn to friends, family, or credit cards 
to finance their businesses.
  The SBA Microloan program provides access to capital through 
nonprofit intermediaries that will loan up to $50,000 for their upstart 
companies. These intermediaries also offer technical assistance and 
counseling to facilitate their business' success.
  H.R. 2056 will improve the SBA Microloan program by expanding the 
lending volume to microloan intermediaries, by giving them greater 
flexibility with their SBA technical assistance grants, to provide more 
preloan comprehensive assistance to businesses in their infancy, and by 
requiring the SBA to study and report to Congress on the utilization of 
the program.
  This bill provides meaningful reforms to modernize the SBA Microloan 
program, and I am a proud cosponsor. This is a needed bill to support 
the engine of our economy: our small businesses.
  Mr. Speaker, I urge my colleagues to support this bipartisan 
legislation.
  Ms. JUDY CHU of California. Mr. Speaker, I yield as much time as she 
may consume to the gentlewoman from Florida (Mrs. Murphy).
  Mrs. MURPHY of Florida. Mr. Speaker, I rise in support of H.R. 2056, 
my bipartisan bill to improve the Small Business Administration's 
Microloan program.
  Small businesses are the backbone of our Nation's economy. In my home 
State of Florida, there are 2.4 million small businesses, which is 99.8 
percent of all employers in the State. These businesses employ 3.2 
million workers.
  In my central Florida district, we have a vibrant community of 
entrepreneurs, and they tell me the number one challenge they face is 
access to capital. As someone who counseled entrepreneurs and 
businesses in the private sector before I came to Congress, I know how 
difficult it can be to obtain the capital you need to start and grow a 
small business. That is why this bill to improve SBA's Microloan 
program is so important.
  Mr. Speaker, I thank Chairman Chabot and Ranking Member Velazquez for 
helping to advance this bill through the Small Business Committee, 
where the bill received unanimous support. I also thank the 
Administrator of the SBA, Linda McMahon, and her senior staff for 
working with my office to make modest changes to the bill after it was 
introduced.
  These changes should better position the bill to move through 
Congress and then to be signed into law by the President.
  The Microloan program is one of several lending programs administered 
by the SBA. Its goal is to help small-dollar borrowers who want to 
start or grow their business. Under this program, the SBA makes loans 
to nonprofit organizations known as intermediaries. These 
intermediaries, in turn, make short-term loans up to $50,000 to small 
businesses and nonprofit childcare centers. Recipients of microloans 
use these funds to finance their operations and to acquire supplies and 
equipment.
  The Microloan program seeks, in particular, to assist small business 
owners with little or no credit history, women and minority 
businessowners, and aspiring and existing entrepreneurs who may not 
qualify for traditional bank loans or even for the larger loan 
guarantee programs that the SBA administers.
  In fiscal year 2016, intermediaries provided over $60 million in 
loans to small firms around the country, creating or retaining nearly 
18,000 jobs in the process. While the loans may not be large, they can 
mean the difference between a small business starting up and succeeding 
or struggling and shuttering.
  Despite the relative success of the Microloan program, it must be 
modernized. My bill would improve the program in two respects. First, 
the bill would increase the total amount an intermediary can borrow 
from the SBA from $5 million to $6 million. This will allow 
intermediaries to make more small-dollar loans to more small businesses 
and entrepreneurs.
  Second, the bill would enable intermediaries to use a larger 
percentage of the technical assistance grants they receive from the SBA 
in order to help small business owners and entrepreneurs navigate the 
microloan applications process.
  Mr. Speaker, I respectfully ask my colleagues on both sides of the 
aisle to support this bill, which will assist and empower more small 
businesses.
  Mr. CHABOT. Mr. Speaker, I have no further speakers, and I reserve 
the balance of my time.
  Ms. JUDY CHU of California. Mr. Speaker, I have no further speakers, 
and I yield myself the balance of my time to close.
  Mr. Speaker, SBA's Microloan program fulfills a critical need in the 
capital markets. It is a key resource for startup, newly established, 
and growing small businesses, many of which come from traditionally 
underserved markets, where personal and commercial credit are hard to 
come by.
  The Microloan Modernization Act of 2017 makes targeted reforms to 
assist more of these small businesses, by raising the amount that the 
SBA may commit to an intermediary and raising the cap on the amount of 
grant funding for technical assistance.
  These changes would further assist very small businesses to obtain 
loans and, in turn, provide them greater opportunity to create and 
retain the jobs that they need.
  With no significant effect on the Federal budget, I can think of no 
better time to make long-sought changes to improve the program. As 
such, I once again would urge my colleagues to support this 
legislation.
  Mr. Speaker, I yield back the balance of my time.
  Mr. CHABOT. Mr. Speaker, in closing, I would note again that we have 
bipartisan work on this committee. I thank Mrs. Murphy and Mr. Bacon 
for working together and pushing this bill, which I think will benefit 
small businesses all across the country. I we appreciate that. Mrs. 
Murphy, of course, is from Florida, and Mr. Bacon is from Nebraska.
  I think the Microloan program really is an important tool in the 
SBA's capital access toolbox, but it is in need of modernizing, and 
H.R. 2056 does that. These are the reforms, I think, that the Nation's 
job creators need.
  Small businesses, startups, and entrepreneurs have the ideas to 
create the next great American company. We just need to provide the 
correct environment for that growth to take place, and I think this is 
something that will contribute towards that possibility and, therefore, 
be able to create more jobs for more Americans all across the country.
  Mr. Speaker, I would urge my colleagues to support H.R. 2056, and I 
yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Ohio (Mr. Chabot) that the House suspend the rules and 
pass the bill, H.R. 2056, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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