[Congressional Record (Bound Edition), Volume 161 (2015), Part 8]
[House]
[Pages 11388-11390]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  MICROLOAN MODERNIZATION ACT OF 2015

  Mr. CHABOT. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 2670) to amend the Small Business Act to provide for 
expanded participation in the microloan program, and for other 
purposes.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 2670

       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 2015''.

     SEC. 2. WAIVERS OF 25/75 RULE.

       (a) Waiver Authorized.--Section 7(m)(4)(E)(i) of the Small 
     Business Act (15 U.S.C. 636(m)(4)(E)(i)) is amended by adding 
     at the end the following: ``The Administrator shall by rule 
     establish a process by which intermediaries may apply for and 
     the Administrator may grant a waiver from the requirements of 
     this clause.''.
       (b) Contents of Rule.--In the rule required by the 
     amendment made by subsection (a), the Administrator of the 
     Small Business Administration shall require any applicant for 
     a waiver to--
       (1) to specify how such applicant will use the additional 
     technical assistance; and
       (2) provide assurance in a form provided for by the 
     Administrator in the rule that the intermediary will have 
     sufficient funds to provide technical assistance to all of 
     the intermediary's borrowers.
       (c) Rulemaking Requirements.--The rule required by 
     subsection (a) shall be promulgated after notice and the 
     opportunity for comment of not less than 60 days. Such 
     regulation shall be codified in the Code of Federal 
     Regulations and shall incorporate any delegation of the 
     Administrator's authority to approve waivers to any 
     appropriate subsidiary official.

     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. EXTENDED REPAYMENT TERMS.

       Section 7(m)(6) of the Small Business Act (15 U.S.C. 
     636(m)(6)) is amended by adding at the end the following:
       ``(F) Repayment terms for loans to small businesses.--The 
     Administrator may not impose limitations on the term for 
     repayment of a loan made by an intermediary to a small 
     business concern or entrepreneur, except that--
       ``(i) in the case of a loan made by an intermediary of 
     $10,000 or less, the repayment term shall be not more than 6 
     years; and
       ``(ii) in the case of a loan greater than $10,000, the 
     repayment term shall be not more than 10 years.''.

     SEC. 5. LINES OF CREDIT AUTHORIZED.

       Section 7(m)(6)(A) of the Small Business Act (15 U.S.C. 
     636(m)(6)(A)) is amended by inserting after ``short-term'' 
     insert ``(including lines of credit)''.

     SEC. 6. GAO STUDY OF MICROENTERPRISE PARTICIPATION.

       Not later than 120 days after the date of enactment of this 
     Act, the Comptroller General of the United States shall 
     complete a study on and report to the Committee on Small 
     Business of the House of Representatives on the following:
       (1) The operations (including services provided, structure, 
     size, and area of operation) of a representative sample of--
       (A) intermediaries that are eligible for participation in 
     the microloan program under section 7(m) of the Small 
     Business Act and that do participate; and
       (B) intermediaries (including those operated for profit, 
     operated as non-profits, and those affiliated with a United 
     States institution of higher learning) that are so eligible 
     and that do not participate.
       (2) The reasons why intermediaries described in paragraph 
     (1)(B) choose not to participate.
       (3) Recommendations on how to encourage increased 
     participation in the microloan program by intermediaries 
     described in paragraph (1)(B).
       (4) Recommendations on how to decrease the costs associated 
     with participation in the microloan program for eligible 
     intermediaries.

     SEC. 7. OFFICE OF ADVOCACY ECONOMIC STUDY OF MANDATORY 
                   SAVINGS REQUIREMENT.

       Not later than 120 days after the date of enactment of this 
     Act, the Chief Counsel for Advocacy of the Small Business 
     Administration shall submit to the Committee on Small 
     Business of the House of Representatives a report on the 
     economic impact of a mandatory savings requirement on 
     business concerns eligible to participate in the microloan 
     program under section 7(m) of the Small Business Act, 
     including on the benefits and costs of such a requirement and 
     recommendations on implementation of such a requirement.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Ohio (Mr. Chabot) and the gentlewoman from New York (Ms. Velazquez) 
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 materials 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, overseen by the Small Business 
Administration, the SBA, is designed to provide credit for those 
entrepreneurs that would not otherwise have any access to credit, even 
basic revolving credit.
  Among the SBA's capital access programs, the microloan program is 
unique because it also provides technical assistance to borrowers. It 
merges the money with the know-how.
  To borrow a sports reference, microloans punch above their weight. I 
know the President has used that phrase on a number of occasions. These 
small-dollar loans are often the most difficult to receive and 
typically are the deciding factors in an entrepreneur's ability to 
start a business. This is demonstrated by the large number of first 
generation entrepreneurs who have received assistance under the 
microloan program.

[[Page 11389]]

  Think about the number of successful individuals who recall starting 
a business with funds pooled from family and friends. Well, if no one 
in your family has started a business or has money to lend, then that 
entrepreneur's dream quickly fades to a distant memory. This is 
particularly true in traditionally underserved markets.
  By making small-dollar loans less complicated and more accessible, we 
will empower individuals to become entrepreneurs; lift up their 
families; improve their communities; and, most importantly, create jobs 
for a whole lot of Americans.
  H.R. 2670 does that. This bill enhances the microloan program by 
allowing microloan intermediaries greater flexibility in providing 
loans and technical assistance to their borrowers. The expectation is 
that the greater flexibility will result in greater participation by 
microlenders in the microloan program, thereby increasing the 
availability of critical small-dollar loans to these micro-
entrepreneurs that punch above their size.
  Despite the greater flexibility, H.R. 2670 also provides safeguards 
to maintain the primary feature of the program, and that is low-dollar 
loans offered to micro-entrepreneurs, along with intermediary-provided 
technical assistance.
  By modernizing the microloan program, as H.R. 2670 does, we are 
allowing the little guy a chance to get off the ropes, use their 
skills, and create innovative ideas to compete with the heavyweights of 
American industry. We all strive for a stronger, more competitive 
economy; and this bill aids in that mission.
  Mr. Speaker, this bill has broad, bipartisan support once again.
  I urge my colleagues to vote ``yes'' on H.R. 2670, and I reserve the 
balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, since 1991, the SBA microloan program has provided 
millions of dollars in financing and technical assistance to small 
businesses and entrepreneurs.
  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.
  However, the program remains substantially the same as when it was 
first enacted. Over the years, we have identified a number of the 
program elements that could be updated to better deploy capital.
  With that goal in mind, I want to thank Congressman Moulton for 
introducing this important legislation. The Microloan Modernization Act 
of 2015 will make a number of targeted improvements to assist small 
businesses.
  For borrowers, SBA set the maximum term of a microloan at 6 years. 
Particularly for larger microloans, this has caused financial strain 
due to higher monthly payments and is impeding some businesses from 
growing.
  Today's bill would allow a repayment period of up to 10 years for 
loans greater than $10,000, providing borrowers with the flexibility to 
better manage cash flow, improve operations, and create more jobs. 
Similarly, SBA has prohibited lines of credit; yet not all businesses 
need a fixed-rate term loan.
  A line of credit is sometimes the better product for a microbusiness 
that has cyclic or uneven cash flow. Today's bill will give borrowers 
and lenders the flexibility to get them in the right loan product for 
their needs.
  For intermediary lenders, today's bill would create a new waiver to 
the 25-75 rule that restricts the use of technical assistance grants. 
This waiver process will help intermediaries more efficiently deploy 
technical assistance funding.
  Additionally, the legislation will raise the lending cap by 20 
percent. By giving successful intermediaries access to an additional $1 
million in SBA funding, they will be able to serve more borrowers in 
high-demand areas.
  The microloan program fills a critical gap in the capital markets, 
helping underserved businesses that are too small for the banking 
sector yet too big to finance with a credit card or loans from friends 
and family.
  Again, Mr. Speaker, I would like to thank Mr. Moulton for introducing 
this bill. It will go a long way toward increasing access to capital 
for our Nation's small businesses.
  Mr. Speaker, I just would like to point out the fact that 62 percent 
of microborrowers are women and minorities, and so this is filling an 
important gap that exists for these groups to access capital.

                              {time}  1630

  I thank the gentleman for introducing this important piece of 
legislation, and I reserve the balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield 3 minutes to the gentleman from 
Florida (Mr. Curbelo), who is the chairman of the Subcommittee on 
Agriculture, Energy and Trade of the Committee on Small Business.
  Mr. CURBELO of Florida. Mr. Speaker, I thank the chairman of the 
Committee on Small Business for yielding, and I also thank him for his 
leadership on all of these important issues. I also want to commend the 
gentleman from Massachusetts (Mr. Moulton) for his work on this 
important piece of legislation.
  Today, I rise in support of H.R. 2670, the Microloan Modernization 
Act of 2015. The microloan program is unique due to its focus on 
merging technical assistance with access to capital. For several micro-
entrepreneurs, particularly those in underserved markets, this offers a 
way to get the small dollar loans, which a conventional bank would 
otherwise deny, while learning important skills, such as developing a 
business plan, that will be critical as the company finds success and 
grows.
  Last year alone, the microloan program was responsible for providing 
nearly $56 million in capital and aiding small businesses in creating 
or retaining 15,000 jobs.
  However, after listening to several entrepreneurs and microloan 
intermediaries, it became clear that for the microloan program to truly 
tap into its potential, changes were necessary.
  H.R. 2670 strives to make those changes and better support 
entrepreneurs. For example, currently, the statute says that microloan 
intermediaries may make short-term fixed-rate loans to small firms. 
Short term can mean different things to different people, but according 
to SBA regulations, short term means 6 years.
  While in some instances this may make sense when the loan is a lower 
amount, this one-size-fits-all approach is not beneficial to small 
firms. This bill would remedy that by establishing maximum term limits 
for loans made by intermediaries to their borrowers: 6 years for loans 
under $10,000, and 10 years for loans over $10,000.
  While this may seem like a minor change, we all know that allowing 
borrowers to get the best repayment terms possible is crucial for 
ensuring low default rates and increasing participation in the 
microloan program.
  Mr. Speaker, in summary, this is a commonsense, bipartisan reform 
that will increase access to capital for those most challenged to 
receive--our micro-entrepreneurs.
  I am proud to be a cosponsor of this legislation, and I congratulate 
Mr. Moulton for advancing this bill and Chairman Chabot for bringing it 
to the House floor.
  I urge my colleagues to support H.R. 2670 and remind them that the 
reason we in the Small Business Committee work so hard for these 
entrepreneurs, for these people that are making a difference, is 
because they hire those in our society, in our communities, that most 
need jobs. Think of the college graduate who is looking for a job; 
think of the immigrant who arrived in this country and is looking for a 
way forward. It is small businesses that oftentimes give these people 
their first shot at success.
  Ms. VELAZQUEZ. Mr. Speaker, I yield such time as he may consume to 
the gentleman from Massachusetts (Mr. Moulton), the sponsor of the 
legislation.
  Mr. MOULTON. Mr. Speaker, I thank Ms. Velazquez for yielding.
  Mr. Speaker, we often say that small businesses are the engine of 
economic

[[Page 11390]]

growth. That is true; and if you look at the data, new businesses--
those younger than 5 years old--created nearly all of our economy's new 
jobs in the past two decades.
  In order to create the conditions for job creation, the Federal 
Government must increase access to capital so new entrepreneurs with a 
good idea can take a risk and start a new business. The Small Business 
Administration's microloan program fills a critical gap in the capital 
markets, helping underserved businesses that are too small for the 
banking sector yet too big to finance with a credit card or loans from 
friends and family.
  The program has provided hundreds of millions of dollars in financing 
and technical assistance to small businesses and entrepreneurs, but the 
program is in need of reform. That is why I introduced H.R. 2670, the 
Microloan Modernization Act of 2015, which will make a number of 
targeted improvements to the program so more borrowers can benefit from 
access to capital.
  First, the bill increases the loan limit cap for intermediary 
lenders. Many successful intermediaries have hit the current $5 million 
cap and, as a result, deserving small businesses are denied capital 
through no fault of their own.
  Second, the bill extends the loan repayment period for loans greater 
than $10,000. This small change will provide borrowers with the 
flexibility to better manage cash flow, improve operations, and create 
more jobs.
  Third, the bill permits lines of credit, which are currently 
prohibited by the SBA. Not all businesses need a fixed-rate term loan. 
Sometimes a more flexible line of credit is the better product for a 
small business that has cyclic or uneven cash flow.
  Fourth, the bill creates a waiver for an overly rigid technical 
assistance formula known as the 25/75 rule to help intermediaries 
deploy technical assistance more efficiently.
  Lastly, the bill commissions two studies to explore ways to 
incentivize intermediaries to participate in the microloan program and 
determine if mandatory savings accounts would benefit entrepreneurs.
  The microloan program supported nearly 4,000 small businesses just 
last year, and two of these successful businesses are located in Lynn, 
Massachusetts, in my district. Prism Products, an industrial 
distributor, received a microloan from the SBA to purchase extra 
inventory. As a result of the loan, owner Lisa Fitzpatrick was able to 
increase revenue and hire a sales professional with 15 years of 
experience.
  In 2013, local restaurateurs Shawn and Noyan Edmond fulfilled their 
lifelong dream of opening a Caribbean restaurant in downtown Lynn. The 
microloan enabled the Edmonds to purchase new kitchen equipment and 
make renovations to the storefront of Rite Spice Caribbean.
  As our economy recovers from the recession, we need more people like 
the Edmonds and Lisa Fitzpatrick to take a risk and start a business, 
and we need the SBA microloan program to help them. That is why the 
Microloan Modernization Act of 2015 is so critical.
  In closing, I would like to thank my ranking member, Nydia Velazquez, 
for her work on this bill; my chairman, Steve Chabot; and my 
colleagues, Representatives Curbelo, Chu, Takai, and Radewagen, for 
cosponsoring this bill.
  I urge my colleagues to support America's newest entrepreneurs and 
vote ``yes'' on this important legislation.
  Mr. CHABOT. Mr. Speaker, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  The microloan program provides very small loans to start-up, newly 
established, or growing small businesses. Many of these businessowners 
come from traditionally underserved markets, where personal and 
commercial credit is hard to come by.
  As a result, the SBA's microloan program is a critical resource that 
not only injects much-needed capital, but provides the necessary 
business training that ensures borrowers are equipped with the 
knowledge needed to succeed.
  Since the end of the recession, microlending is up 25 percent 
nationwide. By the way, for the last couple of years, the default rate 
on microloans is going down. In fact, SBA requested an additional $10 
million for next year to handle demand. I can think of no better time 
to make long-sought changes to improve the program's efficiency and 
capital deployment.
  I wanted to thank the gentleman from Massachusetts for introducing 
the Microloan Modernization Act of 2015. It will give borrowers new 
repayment flexibility and loan choices, provide more flexibility to 
intermediaries, and inject additional capital in high-demand areas.
  I urge a ``yes'' vote, and I yield back the balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, in closing, as we work to get capital into the hands of 
entrepreneurs, we need to keep SBA programs relevant. We also must 
ensure that our lending partners have the flexibility to manage their 
loan portfolios in a way that makes the most sense for the borrower. 
H.R. 2670 does that.
  I want to thank Mr. Moulton and Mr. Curbelo for their leadership on 
these reforms. And I once again want to recognize the ranking member, 
Ms. Velazquez, for her leadership and her cooperation in getting this 
type of legislation to the floor today so that we can pass this.
  I urge my colleagues to support H.R. 2670, 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. 2670.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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