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NOW: Rubio Chairs Hearing on Reauthorizing the Small Business Administration’s Access to Capital Programs
Washington, D.C. — U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, has convened a hearing titled “Reauthorization of the SBA’s Access to Capital Programs.”
The hearing is livestreamed on the committee’s website here.
Rubio’s opening remarks as prepared can be found below.
Rubio: “I am pleased to hold today’s hearing, titled “Reauthorization of the SBA’s Access to Capital Programs” to start off our reauthorization of the Small Business Act, and programs in the Small Business Investment Act.
“Today, we begin that work with a robust discussion of the SBA’s access to capital programs.
“To frame this discussion, it is important to first lay out the reasoning for this reauthorization process.
“Historically, this Committee, along with our colleagues on the House Small Business Committee, undertook the process of reauthorizing the Small Business Act periodically. Most recently, the process was undertaken every three years.
“That process fell by the wayside, and the last time a reauthorization was completed in its entirety was in 2000.
“When that authorization expired in 2003, Congress began a long series of extensions of the Small Business Act.
“In 2011, Congress stopped reauthorizing the Small Business Act altogether, instead deferring to the Appropriations Committee to set authorization levels.
“I believe that it is the responsibility of this Committee, and Congress, to review programs under the Small Business Act on a regular basis. This is to ensure that they are serving small businesses as intended, and that taxpayer dollars are targeted to the most efficient and effective programs.
“When operating at their peak, the Small Business Administration’s programs provide an integral service and opportunities to entrepreneurs and small businesses who play an important role in our country’s economic health and prosperity.
“We know the statistics: according to the SBA’s Office of Advocacy, small businesses comprise 99.9 percent of all firms and accounted for 65.9 percent of net new job creation from 2000-2017.
“When we talk about small business being the backbone of the economy, it is not just a talking point.
“However, we also know that net new small business formation is still below the 36-year average, which should concern all of us. In order to maintain a growing economy and competitive workforce, we need to have a robust and growing small business sector.
“One of the major barriers that entrepreneurs and small businesses face is access to capital. Even with a booming economy, lending to small businesses is below pre-recession levels by approximately $65 billion.
“According to the Federal Reserve’s latest reports on the availability of credit to small businesses, lending to small businesses is still 10.5 percent below 2008 levels, at which point the recession was hitting hard.
“Lending to startups and small businesses has clearly not recovered from the recession and SBA’s programs have filled a real gap in the small business lending market.
“The SBA serves an important function by offering a range of loan products that provide financing to small businesses who are unable to access capital in the private marketplace.
“The four lending programs we will discuss today include programs with a wide range of uses, and loan amounts. These programs are: the 7(a) Loan Guaranty Program, the 504/CDC Loan Guaranty Program, the 7(a) Community Advantage Pilot Program, and the Microloan Program.
“The 7(a) Program is the SBA’s flagship program, with more than $25 billion in loans in fiscal year 2018 alone. The entry point of this program is the inability for borrowers to receive credit elsewhere on reasonable terms and conditions, meaning they are unable to receive a conventional loan with terms that will work for them and their business.
“The 504/CDC Program provides long-term, fixed rate financing ideal for large equipment and real estate purchases. This program also includes a job creation or public policy requirement in order for the loan to be financed.
“The 7(a) Community Advantage Pilot Program provides small-dollar loans under $250,000 and requires that 60 percent of these loans be made in underserved, or emerging, markets.
“Finally, the Microloan Program provides loans of up to $50,000 to entrepreneurs and small businesses, with an average loan size of $14,000. This program also provides technical assistance to help borrowers before and after they receive a loan.
“The access to capital programs, including the four I just mentioned, and the Office of Capital Access, represent the largest office and portfolio at the agency.
“Since we have not undertaken a full reauthorization of the Small Business Act in many years, it is integral that we assess the programs, look at the history and impetus for the creation of each program, discuss the current state of the programs, and pull suggestions and ideas from members and witnesses that will make the programs better serve small businesses.
“This process will give the Committee the opportunity to consider modernization of the programs, as well as programmatic changes to improve the delivery and efficiency in their management at SBA.
“It is also vital that we ensure SBA’s access to capital programs are relevant to, and meet the needs of, tomorrow’s entrepreneur and small business owner.”