[Congressional Record (Bound Edition), Volume 150 (2004), Part 5]
[Senate]
[Pages 6024-6028]
[From the U.S. Government Publishing Office, www.gpo.gov]




 TEMPORARY EXTENSION OF PROGRAMS UNDER THE SMALL BUSINESS ACT AND THE 
                 SMALL BUSINESS INVESTMENT ACT OF 1958

  Mr. FRIST. I ask unanimous consent that the Senate proceed to the 
immediate consideration of H.R. 4062, which is at the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report the bill by title.

       A bill (H.R. 4062) to provide for an additional temporary 
     extension of programs under the Small Business Act and the 
     Small Business Investment Act of 1958 through June 4, 2004, 
     and for other purposes.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. SNOWE. Mr. President, I rise to support passage of H.R. 4062, a 
bill that provides needed improvements to the Small Business 
Administration's largest business loan program, the ``Section 7(a)'' 
program, at no additional cost to the Government.
  The SBA's 7(a) loan program has proven that a small amount of 
government backing can greatly enhance private-sector financing for 
small businesses, and that the economic benefits reverberate throughout 
the economy at large. Small businesses create almost 75 percent of the 
net new jobs in the economy. The 7(a) program harnesses this power and 
has helped small businesses to create or retain nearly 2 million more 
jobs in the last five years.
  The program is so popular among small businesses that demand for 
program funds in the first few months of fiscal year 2004 suggests that 
requests for the entire year would far out-pace its available budget. 
As a result, in January 2004, the SBA shut the program down, and then 
re-opened it with a loan cap of $750,000--only 37.5 percent of the $2 
million maximum previously available. Faced with these restrictions, 
small businesses have urged Congress and the administration to improve 
funding opportunities for the rest of 2004.
  Together with my fellow Senators, colleagues in the House, and a 
large coalition of small businesses and lenders, we have worked for 
several months to construct a way to improve the program by allowing 
lenders to help alleviate the funding shortfall. This plan would 
benefit small businesses and lenders by allowing loans larger than 
$750,000, and by allowing ``piggyback'' loans, or by allowing financing 
packages with several portions. And again, we could do this without 
increasing Government expenditures.
  The bill would achieve these goals in three ways. First, lenders 
would return to the SBA a 0.25 percent, or one-quarter of one percent, 
fee on new loans under $150,000. Lenders are currently permitted to 
retain this amount from a borrower fee, of 1 percent, that lenders 
already collect and pass on to the SBA. For loans larger than $150,000, 
lenders already must pass the entire borrower fee on to the SBA; this 
change would make the treatment the same for all loan sizes. This 
proposal was first made by the SBA, as part of a larger plan the SBA 
submitted to Congress this year.
  Second, a lender fee on new loans would be increased from 0.25 
percent, one-quarter of one percent, to 0.36 percent. This fee cannot 
be passed on to small businesses.
  Third, lenders would be permitted to provide small businesses with 
``piggyback'' financing packages that include a 7(a) loan portion and a 
non-7(a), strictly commercial portion, if the lenders paid the normal 
fees on the 7(a) loan portion and a 0.70 percent fee on the non-7(a) 
portion. Prior to January 2004, the SBA permitted this type of 
financing, but without receiving any fee income for the non-7(a) 
portion, and without an upper limit on the total financing. H.R. 4062 
prohibits the non-7(a) portion of the financing from being larger than 
the 7(a) loan.
  The bill also extends to June 4, 2004, the authorization for several 
SBA programs that would otherwise expire on April 2, 2004, including 
the Preferred Surety Bond Program, the Small Disadvantaged Business 
Program, and the SBA's co-sponsorship authority. Finally, the bill 
extends to September 30, 2004, the authorization for the SBA's 
Certified Development Company program, also known as the 504 Loan 
Program.
  H.R. 4062 is very similar to legislation which I introduced in the 
Senate on March 10, S. 2193, the ``Small Business Loan Revitalization 
Act of 2004,'' which I was joined in sponsoring by 18 fellow Senators. 
That legislation was the result of months of hard work and negotiations 
with fellow Senators, colleagues in the House, small businesses, 
lenders, and the administration. I regret that S. 2193's provisions, 
such as its lower fees for lenders, and the increased debenture sizes 
for the 504 Loan Program which I recently added by amendment, are not 
being enacted today, but I am pleased that, according to the Small 
Business Administration's projections, H.R. 4062 at least achieves the 
goal of allowing the 7(a) program to operate without restriction 
through the remainder of this fiscal year.
  (At the request of Mr. Daschle, the following statement was ordered 
to be printed in the Record.)
 Mr. KERRY. Mr. President, I want to make a statement about a 
small business bill that the Senate passed last week. I am referring to 
H.R. 4062, which, among other things, provides a temporary solution to 
the administration's self-created funding crisis for the SBA's largest 
small-business lending program, commonly referred to as the 7(a) Loan 
program. In many ways, the bill is similar to legislation I introduced 
four weeks ago, S. 2186. For example, it adopts my provision to keep 
the 504 program operating through the rest of this fiscal year instead 
of subjecting the 504 borrowers and lenders to another series of 
disruptive temporary extensions. Similar to my bill, it also lifts the 
$750,000 cap on loans, lifts the restriction on combination or 
piggyback loans, gets loans to those small businesses denied 7(a) loans 
since the program shutdown in January, and extends the operation of the 
SBA overall, including the Small Disadvantaged Business Program and the 
Surety Bond program.
  In general, H.R. 4062 is a step in the right direction and I commend 
Congressman Manzullo and Congresswoman Velazquez for their work. I do, 
however, have some concerns about the bill, concerns shared by many in 
the small business community, and I regret that the Senate Republicans 
blocked a bi-partisan Snowe-Kerry amendment to address those concerns.
  For example, H.R. 4062 did not address the pressing need to correct 
the outdated funding formula for the SBA's Women's Business Centers 
program. The law needed to be changed before the Agency awards this 
year's grants because more than 50 Centers around the country are at 
risk of losing their matching federal money. I had been advocating for 
this change since I introduced S. 2186 on March 9, and the Snowe-Kerry 
amendment included my provision. Unfortunately, one or two Senate 
Republicans objected to the provision and blocked its passage.
  As for the 7(a) Loan Program, I am concerned about the extent of the 
fee increases, the lack of data justifying the increases, the rapid 
expansion of the SBAExpress pilot program, and the

[[Page 6025]]

precedent that these changes will have on developing a workable 
approach to next year's 7(a) funding problem created by the President's 
request for zero funding for fiscal year 2005. The Snowe-Kerry 
amendment took a much more measured approach to the fee increases, 
adopting the levels supported in S. 2186 and S. 2193, with flexibility 
for the SBA to increase the fees up to the levels in the House bill 
should the need arise to keep the program running for the remainder of 
the year without restrictions. For example, instead of temporarily 
charging a lender fee on the commercial portion of a combination or 
piggyback loan of .5 percent, H.R. 4062 charges 40 percent more, 
imposing a fee of .7 percent. Senator Snowe devised the discretionary 
stair-step compromise in our amendment and it was preferred by the 
lending community. It is unfortunate that the lenders may be required 
to pay higher fees than necessary to reach the goal: Congress seeks to 
keep access to 7(a) loans available to small businesses for the rest of 
this year, fiscal year 2004.
  The Snowe-Kerry amendment also took a more measured approach in 
expanding the SBAExpress program. H.R. 4062 includes a controversial 
provision proposed by the administration that would expand the current 
SBAExpress reduced guarantee pilot program from loans of $150,000 to $2 
million. An increase of 700 percent.
  The administration contends that the pilot expansion would only be 
voluntary and therefore harmless if not used. While SBAExpress has 
worked well for relatively small loans, those averaging around 
$150,000, lenders have testified before our Committee that SBA Express 
is not workable for all sizes of loans and that the volume of 
SBAExpress loans is not likely to increase. In fact, the smallest SBA 
lenders, community banks, have testified that to mandate SBAExpress 
would drive virtually all community banks from the program. Yet the 
administration argues this voluntary authority is necessary because, 
when combined with other program changes, it would reduce the subsidy 
rate, thereby stretching the 7(a) loan funding, getting the program 
closer to their latest program volume projections.
  This can only be true, however, if the volume of SBAExpress loans 
increase. To date, the administration has not produced any 
documentation supporting that contention, and the small business 
lenders fear that the administration will circumvent the requirement 
that this be strictly voluntary by showing preferential treatment to 
lenders who use the SBAExpress program. They believe this will occur in 
order to steer loans away from the regular program, which has a higher 
guarantee of 75 percent to 85 percent. Congresswoman Velazquez held 
strong to including very good provisions aimed at protecting the loan 
program from such tinkering, and she is to be commended for her 
effective advocacy. Unfortunately, even with these safeguards, I 
believe it was premature to enact the administration's SBAExpress 
proposal until better data could be obtained and analyzed. Further, 
since H.R. 4062 is a temporary extension of SBA's authority until June 
4th, 2004, there would have been time for this and other proposals to 
be properly vetted and, if appropriate, adopted.
  Extreme changes like expanding the SBAExpress program 700 percent 
were driven by the administration. The groups agreed to live with them 
only because it was better than the alternatives--further reducing the 
loan cap from $750,000 to $500,000, another shutdown, or the 
administration's proposal to mandate all loans be made through the 50 
percent guarantee SBAExpress program. Let me read to you a few quotes 
by the small business community that reflect the feelings of many 
expressed to this Committee:
  The Independent Community Bankers of America: ``The ICBA did not 
oppose a short-term fix bill that would open up much needed lending to 
small businesses, but only because the alternative pushed by the SBA 
was far worse and would have choked off lenders' ability to continue 
making SBA loans. We didn't want to punish small business because of 
the unwillingness of the SBA to ask for the funds they knew were needed 
to keep the 7(a) program viable. This bill is only a short term Band-
Aid. The ICBA continues to oppose the SBA's efforts to squeeze the 7(a) 
program out of existence and hopes a genuine good faith resolution can 
be part of the FY 2005 budget.''
  The American Bankers Association as quoted in the ``American Banker'' 
on April 1, 2004: ``The need to avoid an even lower loan-size cap is 
why the ABA supported the compromise, despite having serious 
reservations about the expansion of the SBAExpress and the additional 
fees on lenders. `We are not totally pleased with it, but we're not 
going to write a letter opposing it', said Mr. [James] Ballentine 
[Director of Community Development]. `We believe the lenders bent over 
backwards to restart this program, and we've seen very little movement 
on the part of the Agency.'''
  Mr. President, we are all glad that the program is back in business 
for the rest of the year, particularly for the small businesses that 
have been hung out to dry since the January shutdown of the program. 
The delays imposed on the FY2004 fix for the 7(a) loan program were 
unnecessary. There were several opportunities--bills or amendments--
since March 10th to mitigate the funding shortfall or all together fix 
it, but they've been blocked or stalled.
  Mr. President, waiting has a price. Not only to the qualified small 
businesses waiting for needed loans and for those who had been promised 
loans in January only to have the administration abruptly impose a 
crippling loan cap, but also to the taxpayer. If either of the changes 
Senator Snowe and I had proposed in our bills, S. 2186 and S. 2193, had 
been enacted as part of H.R. 3195 in mid-March, we could have saved 
more than $100,000 a day, leveraging at least another $150 million in 
small business loans in this fiscal year. These delays are fiscally 
irresponsible.
  The Republican obstructionists will justify their delay tactics by 
arguing that the earlier bills did not solve the entire funding problem 
for the rest of the year. However, there are numerous problems with 
such a claim. One, time was of the essence for the small businesses 
that had been shutout since January. Two, no one knows if the 
administration's estimates are accurate and the confidence in the 
econometric model that predicts future program costs has gone down as a 
result of the SBA's latest estimates. For example, how could imposing a 
fee on piggyback loans of .5 percent, a fee that will generate new 
income for the program, not offset the costs at all? And, if that is 
true, how could additional savings from increasing that fee by 40 
percent, to .7 percent be only one one-hundredth of one percent? I 
don't know of one lender who believes that claim. Three, it would have 
been better to take a step in the right direction and immediately 
reduce the cost of the program to the extent possible in order to 
stretch the lending dollars. This option would have allowed for future 
refinements while saving precious appropriated dollars in the process. 
Four, there would have been (and still are) several other opportunities 
to make adjustments later in the fiscal year.
  With respect to the other important provisions of H.R. 4062, I am 
glad that the bill includes my measure from S. 2186 that allows the 504 
Loan Guarantee Program to operate through the rest of the fiscal year; 
however, I am very disappointed that, despite bipartisan support, the 
Republican leadership refused to include a Snowe-Kerry amendment to 
promote women in business and safeguard one of their only dedicated 
resources of support: the nationwide network of women's business 
centers. The Republicans that blocked our amendment--in support of the 
administration's policy to eliminate experienced, efficient and 
effective women's business centers in favor of new and untested 
centers--are potentially depriving thousands of women in business 
access to much-needed assistance. The Snowe-Kerry amendment, like S. 
2267, would have made a small adjustment to the Women's Business Center 
program that corrects an outdated funding formula, without added cost 
to the Treasury. The adjustment would have changed the portion of 
funding allowed for women's business centers in

[[Page 6026]]

the sustainability part of the program to keep up with the increasing 
number of centers that will need funding this fiscal year. Without it, 
all grants to sustainability centers in 39 States could be cut in 
half--or worse, 23 experienced centers could lose funding completely. 
Our amendment was a bipartisan compromise intended to maintain an 
effective women's business center network; a compromise that was agreed 
to by Chair Snowe, myself, and the bipartisan leadership of the House 
Small Business Committee. It was supported by women's groups across the 
country, and it is my sincere hope that my colleagues in Congress will 
support this change in the very near future.
  I thank the broad coalition of small business trade associations that 
have worked on the various bills and supported the provisions in my 
bill, S. 2186: The trade association of Women Impacting Public Policy 
(WIPP) and the National Association of Women's Business Owners (NAWBO), 
the National Association of Government Guaranteed Lenders (NAGGL), the 
American Bankers Association, the Independent Community Bankers 
Association and the U.S. Chamber of Commerce for endorsing the 
provisions relating to the 7(a) Loan Guarantee Program; WIPP, NAWBO, 
and the Association of Women's Business Centers for fully supporting 
the provisions relating to the Women's Business Centers program, as 
well as the cosponsors of S. 2186. I think anyone who knows of these 
groups, their members and their leadership, knows that they work very 
well with both sides of the aisle and with the leadership of our 
Committee and also the House Committee on Small Business. Working 
cooperatively in a bipartisan fashion makes good sense and has long 
been their practice. We all appreciate their work to fix these 
problems, and for the contribution they make to cultivating small 
startup and growing small businesses in our communities.
  Mr. President, I ask that several letters addressing the issue at 
hand be printed in the Record. I thank my colleagues for their support 
of small businesses and for considering immediate passage of this bill.
  The letters follow.

                                                   March 10, 2004.
       Dear Representative: Today, as the House prepares to vote 
     on H.R. 3915, we are writing to express our concerns with 
     this legislation. We are very disappointed that it does not 
     include a SBA 7(a) program solution. Without a solution the 
     7(a) program will not be allowed to create much needed jobs 
     to help our economy.
        The SBA's flagship 7(a) loan program, the single largest 
     provider of long-term start-up and expansion loans to 
     America's small businesses, has been crippled since the 
     beginning of this fiscal year, when the SBA temporarily shut 
     it down due to a funding shortfall. When the Agency reopened 
     the program a week later, it implemented an artificial loan 
     cap of $70,000--a reduction of more than 50% of the program's 
     statutory loan limit of $2 million--and a prohibition on 
     piggyback loans, which would have allowed lenders to make 
     loans in excess of a loan cap.
        Businesses who had already submitted applications for 
     loans in excess of the new cap were then told their deals 
     would not qualify for the program. These applicants had gone 
     through months of financial planning and had been promised 
     their loans would be approved. Many had already begun 
     purchasing equipment and hiring employees. If their deals do 
     not get done, many will lose earnest money they had taken 
     from personal savings and retirement plans to inject into 
     these loans.
        Other potential applicants who would ordinarily qualify 
     for the 7(a) program have since been told there is no 
     alternative to finance their start-up or expansion. The net 
     result to these small businesses is a loss of faith in the 
     U.S. government. The net result to the economy is a loss of 
     jobs.
        A solution to this lingering problem does exist and it has 
     been communicated to the House Small Business Committee. This 
     proposal has bipartisan support on the Small Business 
     Committee, as well as the support of banking and small 
     business trade groups. The proposed solution would increase 
     fees for lenders to ensure that there is no budget impact. It 
     would maintain the 7(a) program. However, H.R. 3915 ignores 
     this solution.
        Without a 7(a) solution, approximately $3 billion in loans 
     will remain unavailable to small businesses for the remainder 
     of FY 2004--a net loss of approximately 90,000 jobs. We also 
     fear that if a swift and equitable solution is not enacted, 
     many 7(a) lenders will flee the program, leaving a void in 
     availability of the long-term financing that is so crucial to 
     small businesses' success.
        We request that Congress bolster economic recovery and the 
     small businesses that drive it by enacting a 7(a) program 
     solution that has the full support of Congress and the 
     industry.
           Sincerely,
       American Bankers Association.
        America's Community Bankers.
        Independent Community Bankers of America.
        National Association of Government Guaranteed Lenders.
        The Financial Services Roundtable.
                                  ____

                                           National Association of


                                Government Guaranteed Lenders,

                                   Stillwater, OK, March 10, 2004.
     Re SBA 7(a) funding crisis and S. 2186.

     Hon. John F. Kerry,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Kerry: As Congress considers how to solve the 
     ongoing SBA 7(a) program funding crisis, we are writing to 
     express our support for S. 2186, which includes provisions 
     that both Small Business Committees and the 7(a) industry 
     have already agreed are equitable.
       While NAGGL is generally opposed to programmatic fee 
     increases, the 2004 budget for the 7(a) program has made his 
     concession necessary. NAGGL testified in 2003 that 2004 
     program demand would be nearly $12 billion, but the 
     Administration adamantly disagreed with our estimate, 
     providing program level of only $9.5 billion. The 
     Administration has also failed to reprogram any additional 
     money to the 7(a) program or offer a supplemental 
     appropriations request.
       As a result, the SBA's flagship 7(a) loan program, the 
     single largest provider of long-term start-up and expansion 
     loans to American's small businesses, has been crippled since 
     the beginning of this fiscal year, when the SBA temporarily 
     shut it down due to a funding shortfall. When the Agency 
     reopened the program a week later, it implemented an 
     artificial loan cap of $750,000--a reduction of more than 50% 
     of the program's statutory loan limit of $2 million--and a 
     prohibition on piggyback loans, which would have allowed 
     lenders to make loans in excess of a loan cap.
       Businesses who had already submitted applications for loans 
     in excess of the new cap were then told their deals would not 
     qualify for the program. These applicants had gone through 
     months of financial planning and had been promised their 
     loans would be approved. Many had already begun purchasing 
     equipment and hiring employees. And if their deals don't get 
     done, many will lose earnest money they had taken from 
     personal savings and retirement plans to inject into these 
     loans.
       Other potential applicants who would ordinarily qualify for 
     the 7(a) program have since been told there is no alternative 
     to finance their start-up or expansion. The net result to 
     these small businesses is a loss of faith in the U.S. 
     government. The net result to the economy is a loss of jobs.
       The provisions of S. 2186 fix this problem, and the bill 
     has NAGGL's full support. As the trade association 
     representing lenders who make over 80% of loans in the 7(a) 
     program every year, we can attest to the fact that the 
     minimal fee increases in S. 2186 are ones that lenders will 
     pay and will not be passed along to borrowers. We also 
     continue to oppose the SBA's legislative proposal to reduce 
     the guarantee on all 7(a) loans to 50% and allow the 
     legislation that provided for lender and borrower fee 
     decreases through the end of this fiscal year to simply 
     sunset.
       Without the provisions of S. 2186, $3 billion in loans will 
     remain unavailable to small businesses for the remainder of 
     FY 2004--a net loss of approximately 90,000 jobs. We also 
     fear that if a swift and equitable solution is not enacted, 
     many 7(a) lenders will flee the program, leaving a void in 
     availability of the long-term financing that is so crucial to 
     small businesses' success. This will be occurring at a time 
     when our economy is in desperate need of a shot in the arm.
       We request that you press for swift passage of S. 2186 to 
     bolster economic recovery and the small businesses that can 
     drive it. Thank you in advance for your consideration.
           Sincerely,
                                                   Tony Wilkinson,
     President and CEO.
                                  ____



                                           Crystal Collection,

                                       Suwanee, GA, April 5, 2004.
     Hon. John Kerry,
     Ranking Member, Committee on Small Business and 
         Entrepreneurship, Russell Senate Office Building, 
         Washington, DC.
       Dear Senator Kerry: Please support the 7a loan so more 
     small business can succeed. The following suggestions from 
     the National Association of Women Business Owners (NAWBO):
       Allow piggyback loans, but charge 0.50 percent lender fee 
     for each;
       Raise Lender Fees by 0.10 percent; and
       For loans that are under $150,000, have lenders pass the 
     SBA the 0.25 percent fee that lenders currently keep for 
     themselves. This only applies to these small loans.
       Thank you for your support.
           Sincerely,
                                                     Shelly Bloom,
                                                        President.

[[Page 6027]]

     
                                  ____
                                         Linden International,

                                                        Wayne, PA.
     Hon. John Kerry,
     Ranking Member, Senate Committee on Small Business and 
         Entrepreneurship, Russell Senate Office Building, 
         Washington, DC.
       Dear Senator Kerry: I would greatly appreciate your support 
     for the 7a program ``rescue''. I favor the following to help 
     me and many other small businesses rebound and re-grow:
       1. Allow piggyback loans, and charge a 0.50 percent lender 
     fee;
       2. Raise lender fees by 0.10 percent; and
       3. For loans under $150,000, have lenders pay the SBA the 
     0.25 percent fee that the lender now keeps for themselves.
       We are all keening for help to re-establish ourselves and 
     assure a firm foundation for the future of small businesses 
     in the US.
       Sincere thanks.
           Very truly yours,
                                                    Mary Kay Hamm,
     President and CEO.
                                  ____



                                     Proactive Solutions Inc.,

                                   Plantation, FL, March 24, 2004.
     Hon. John Kerry,
     Ranking Member, Committee on Small Business and 
         Entrepreneurship, Russell Senate Office Building, 
         Washington, DC.
       Dear Senator Kerry: My name is Sheila Tobier and I am the 
     president elect of NAWBO (National Association of Women 
     Business Owners). We ask the following from the committee.
       Absent the SBA asking Congress for additional funding, 
     NAWBO supports increasing fees on lenders as an approach to 
     adequately funding the SBA 7(a) program and lifting 
     restrictions.
       Specifically, NAWBO would like the program to:
       Allow piggyback loans, but charge a 0.50 percent lender fee 
     for each;
       Raise lender fees by 0.10 percent; and
       For loans that are under $150,000, have lenders pay the SBA 
     the 0.25 percent fee that lenders currently keep for 
     themselves. This only applies to these small loans.
       Thank you for assisting us in this endeavor.
           Sincerely,
                                                    Sheila Tobier,
     President.
                                  ____



                                        Business Loan Express,

                                       Wichita, KS, March 5, 2004.
     Hon. John F. Kerry,
     Ranking Minority Member, Committee on Small Business, U.S. 
         Senate, Russell Senate Office Building, Washington, DC.
       Dear Mr. Kerry: Please be advised that Business Loan 
     Center, LLC, aka Business Loan Express, LLC, the nation's 
     third largest SBA 7(a) lender, is a strong supporter of the 
     Senate and House bill that is also supported by the ``Access 
     to Capital Coalition Organization,'' which will permit the 
     reopening of a viable 7(a) loan program in America. This 
     means once law, SBA would be required to drop the prohibition 
     against ``piggyback loans'' and eliminate the current loan 
     cap. As most every 7(a) lending organization has indicated 
     since early January 2004, it is absolutely critical that 
     these 7(a) program impediments be dropped at the earliest 
     possible date. As you are aware, no knowledgeable trade 
     organization or 7(a) lending entity supports a mandatory 50% 
     maximum loan guaranty, as it would represent a slow death of 
     the 7(a) loan program. Most every community in America 
     utilizes the 7(a) loan program as a major part of their 
     economic development/job creating/job retention program. If 
     one removed from our economy all businesses and the jobs they 
     create directly and indirectly, who at one time or another 
     received 7(a) loan assistance, this would be a totally 
     different country. To assist the recovery of our economy and 
     the retention and creation of jobs, it is absolutely 
     essential that the 7(a) loan program be returned to its prior 
     dynamic status. Thank you for your leadership in this matter. 
     Please encourage the Administration and your colleagues to 
     support the House and the Senate bill that would solve this 
     current dilemma!
           Respectfully submitted,

                                            Deryl K. Schuster,

                                         Executive Vice President,
     Director, Governmental Affairs.
                                  ____

                                     Association of Small Business


                                          Development Centers,

                                       Burke, VA, January 9, 2004.
     Hon. John Kerry,
     U.S. Senate.
       Dear Senator Kerry: I am writing about the recent decision 
     by the U.S. Small Business Administration (SBA) to suspend 
     making loan guarantees for small businesses under the 7(a) 
     loan program.
       As you know, the SBA announced on December 23rd that it 
     would begin imposing a $750,000 cap on 7(a) loan guarantees 
     effective January 8th, even though Congress has authorized 
     loan guarantees up to $2 million. The SBA's announcement led 
     small businesses with loan applications for more than 
     $750,000 to submit their applications before the announcement 
     deadline. As a result, the SBA experienced a significant 
     increase in 7(a) loan applications and suspended the program 
     until further announcement, on the grounds that the increase 
     in loan applications had led to a shortfall in funding.
       Small businesses throughout the country have seen their 
     loans put in jeopardy as a consequence of this decision, and 
     applicants for loans above $750,000 may be unable to obtain 
     loan guarantees--or be forced to re-apply--even if the 7(a) 
     loan program is re-opened. The ASBDC is hearing from Small 
     Business Development Center (SBDC) counselors in the field 
     that the decision to suspend the 7(a) loan program could pose 
     a severe hardship for many SBDC clients.
       In the past three years, the 7(a) loan guarantee program 
     has helped make financing available to more than 40,000 
     start-up small businesses and 99,000 existing small 
     businesses--leading to the creation of more than one million 
     new jobs. Suspending this vital small business lending 
     program at this critical stage of the economy's recovery from 
     the recession will prevent the start-up and the expansion of 
     small businesses throughout the country, and stymie the 
     economy's creation of new jobs.
       I appreciate all that you do to support small business. I 
     urge you to continue to work with the SBA and the Office of 
     Management and Budget to reopen the 7(a) loan guarantee 
     program and remove the $750,000 loan cap as soon as possible.
           Sincerely,
                                                    Donald Wilson,
     President.
                                  ____



                                                 Compass Bank,

                                    Houston, TX, January 12, 2004.
     Senator John Kerry,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Kerry: I am writing to alert you to an 
     economic crisis that should have been avoided but can still 
     be remedied.
       The U.S. Small Business Administration (SBA) claims it has 
     run out of money for its flagship 7(a) loan program. This is 
     because the Administration did not request adequate funds for 
     the program for fiscal year 2004.
       The Administration only requested a program level of $9.3 
     billion, even though the program did $11.3 billion last year, 
     even with a $500,000 loan cap in place for nearly half of the 
     fiscal year. NAGGL estimated that demand would be $12.5 
     billion beginning with our budget testimonies in February 
     2003.
       Loan volume for the first three months of fiscal year 2004 
     was $3.137 billion, a level of demand that clearly supports 
     NAGGL's estimates of demand.
       Because the Administration did not seek sufficient program 
     level, the SBA has now shut down the 7(a) program until 
     further notice, depriving small businesses of the capital 
     they need in order to expand their businesses, hire new 
     people, and aid the American economic recovery. The shutdown 
     occurred just a few weeks after SBA Administrator Barreto 
     told the NAGGL Annual Conferees that the ``program would not 
     be shutdown, and that the $9.3 billion program request would 
     be sufficient.''
       In unprecedented fashion, the SBA is now rejecting and 
     returning all loan applications. During previous funding 
     shortages, the SBA continued to accept and process loan 
     applications. The loans would then be funded when loan funds 
     became available. The SBA's action, to make small businesses 
     pay for its own mismanagement, is unconscionable.
       Because small businesses are the chief engine of economic 
     recovery, America can ill afford a halt in funding to small 
     businesses in this time when the economy is just regaining 
     steam.
       Though the SBA has been implored by members of both major 
     political parties to immediately seek an equitable solution, 
     the Administration has thus far not come forward with any 
     positive solutions. The Administration has thus far responded 
     only with loan caps, program shutdowns, and excuses why this 
     is Congress' fault.
       One conclusion could be that the Administration desires to 
     either dismantle or significantly change the SBA and the 7(a) 
     program. I'm asking you not to let this happen.
       The Administration should either request a reprogramming of 
     funds or submit a supplemental appropriation request 
     sufficient to fund the 7(a) program to $12.5 billion this 
     year. The SBA should be required to lift both the current 
     program freeze and the artificial $750,000 cap it has put in 
     place to restrict small business access to capital. The SBA 
     should be required to stop the budget gimmicks and put 
     forward a credible budget request that ensures this program 
     is funded properly in fiscal year 2005 and beyond without fee 
     increases to borrowers and lenders. Don't let this 
     Administration dismantle a program that has served small 
     businesses so well for so long.
           Sincerely,
                                                   Harriet Boshaw,
                                   SBA Lending Department.

  Mr. Frist. I ask unanimous consent the bill be read three times, 
passed, and the motion to reconsider be laid on the table, without any 
intervening action or debate, and any statements related to the bill be 
printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (H.R. 4062) was read the third time and passed.

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