[Congressional Record (Bound Edition), Volume 148 (2002), Part 15]
[Extensions of Remarks]
[Pages 21254-21255]
[From the U.S. Government Publishing Office, www.gpo.gov]




SMALL BUSINESS ADMINISTRATION LOAN PROGRAMS SUBSIDY RATE MISCALCULATION

                                 ______
                                 

                         HON. STEVEN R. ROTHMAN

                             of new jersey

                    in the house of representatives

                        Monday, October 28, 2002

  Mr. ROTHMAN. Mr. Speaker, small businesses are reeling from the 
downturn in the economy and are struggling to acquire the capital 
needed to establish or expand their businesses. These same small 
businesses are the backbone of our economy, and provide much of the 
innovation and inventions of new concepts and products that large 
corporations are unable to develop. The Small Business Administration 
plays an important role in supporting and assisting small businesses in 
our

[[Page 21255]]

country by offering a variety of loan programs, as well as counseling 
and training for all types of firms.
  The Small Business Administration and its affiliates, including 
Certified Development Company, not to mention small businesses in 
general, have been struggling in recent years with user fees on loan 
programs and decreased assistance from Congress. Specifically, the 
Administration and the Office of Management and Budget have been 
miscalculating the anticipated cost of loan programs to the taxpayer, 
or the subsidy rates for loan programs.
  The Administration's subsidy rate estimates for the Small Business 
Administration's 7(a) loan program and the 504 guaranteed loan program 
have regularly been miscalculated, leading to unnecessarily high fees 
charged to the borrowers who use the Small Business Administration's 
loan programs. This is, in effect, a tax on small businesses, and must 
be rectified.
  The Administration and the Office of Management and Budget must re-
estimate the subsidy rate calculations to ensure that the 7(a) loan 
program as well as the 504 guaranteed loan program are not threatened, 
and to reduce the tax burden on our nation's small businesses.

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