SCHUMER REVEALS: SMALL BIZ LENDING PROGRAM HAS DOUBLED LENDING TO NY SMALL BIZ BUT HAS NOW EXPIRED PUTTING JOB GROWTH AND EXPANSION AT RISK - SCHUMER PUSHES FOR IMMEDIATE EXTENSION
Small Business Administration Loan Program Has Offered Enhanced Loan Guarantees and Eliminated Fees For Last 18 Months, Jump-Starting LendingProgram Providing Enhanced Guarantees and No Fees Ran out of Funds in July, 6 Months Earlier Than Expected;Schumer Sponsored Legislation Currently on the Senate Floor Will Give Program Cash Infusion So Desperately Needed Credit Does Not Di
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Today, U.S. Senator Charles E. Schumer announced that he is pushing legislation that will extend a program that has delivered over $1 billion in loans to New York small businesses in the last 18 months. The program, which ran out of funds in July of this year, has increased the size of loan guarantees provided by the Small Business Administration (SBA) from 75% to 90% , and has eliminated all fees associated with the loans. This has increased the number of loans issued from approximately 146 per month before the program went into effect, to 265 per month in New York after it went into effect. Before being eliminated, the fee for the average loan was about $6,000, and potentially much more. The legislation Schumer is pushing will also raise the limits on loans offered by SBA. The legislation is fully paid for and will actually reduce the deficit by $1 billion, while extending these vital programs through next year or whenever the $510 million runs out.
"All across New York this program has made a difference for small businesses, giving them the access to credit they need to create jobs and grow the economy, and it's vital we continue it" Schumer said. "In tough economic times like this we can't give small businesses a loan with one hand and then whack them with a fee with the other hand. The legislation I'm pushing will remove a significant burden from our small businesses by getting rid of these fees."
In October of 2008 credit markets across the world froze, choking off the vital resources that small businesses need to be successful. In order to attack the credit crunch ,the American Recovery and Reinvestment Act (ARRA), more commonly known as the stimulus bill, contained two provisions critical to helping small businesses obtain access to credit. First, the stimulus eliminated fees that small businesses pay when they receive an SBA loan, which could cost up to $6,000 or even more. Also, provisions in the stimulus bill increased the rate of SBA loan guarantees from 75% to 90%. The program providing these improved loan terms ran out of funding in July, and Schumer's provision would extend provide it with a $510 million infusion, which will extend the program through next year or whenever the funding runs out.
Importantly, this will be done without adding a dime to the deficit - the small business bill actually reduces the deficit by approximately $1 billion
The program has been an unquestionable success. The monthly average for SBA loans before the enhanced provisions were put into place was $830 million. Dropping the fees and increasing the maximum guarantee brought the average up to $1.36 billion per month. Importantly, this is not the government spending $1.36 billion per month, but guaranteeing loans worth that amount. Additionally, the extension of the program will be fully paid for, and will even lower the deficit by $1billion.
The Small Business Jobs Act currently being debated on the Senate floor contains a range of measures that would help America's and New York's small businesses, from eliminating capital gains on small business income to creating a $30 billion dollar lending facility to get to the heart of the credit crunch. The measure extend provisions originally contained in the ARRA that have proven successful. The proposal to eliminate loan fees on small businesses and increase the rate of loan guarantees has already spurred $26 billion in small business lending and created 650,000 jobs since the stimulus bill's enactment in 2009. The entire small business package would:
<![if !supportLists]> · <![endif]> Eliminate the fees that small businesses are required to pay when they receive an SBA loan. Current fees can add up to $6,000 or even more
<![if !supportLists]> · <![endif]> Increase government loan guarantees for small businesses to 90% from 75%
<![if !supportLists]> · <![endif]> Increase the amount that small businesses could receive from the SBA up to $5.5 million
<![if !supportLists]> · <![endif]> Increase the amount that small businesses could receive through microloans, which are designed to allow businesses to make vital improvements without taking on too much debt, to up to $50,000
<![if !supportLists]> · <![endif]> Give more of New York's small businesses access to working capital by expanding the amount businesses can receive from Express Loans to $1,000,000
During this recession New York's small businesses have struggled to obtain access to the credit they need to grow their businesses and create jobs. The measures passed in the stimulus bill have been providing a major boosts to business owners in New York, but have run out of funds. Schumer's measure would extend those provisions for New York's small businesses with a $510 million infusion. The number of SBA loans issued in New York the month before these provisions were passed in 2009 was approximately 146, but after passage that figure jumped to 265. Since the measure was passed SBA has approved 4,054 Recovery Act funded loans supporting $1,312,507,800 in capital. Businesses owners in New York have saved almost $33 million in fees, and weekly loan volume has increased by 81%.
Below is a region by region breakdown of the numbers:
<![if !supportLists]> · <![endif]> Small businesses in the Capital Region have received 317 loan guarantees worth $77,623,500. They have saved approximately $2,300,000 in fees.
<![if !supportLists]> · <![endif]> Small businesses in Western New York have received 570 loan guarantees worth $94,121,000. They have saved approximately $2,800,000 in fees.
<![if !supportLists]> · <![endif]> Small businesses in the RochesterFinger Lakes Region have received 675 loan guarantees worth $93,673,300. They have saved approximately $2,800,000 in fees.
<![if !supportLists]> · <![endif]> Small businesses in Central New York have received 402 loan guarantees worth $61,322,900. They have saved approximately $1,800,000 in fees.
<![if !supportLists]> · <![endif]> Small businesses in the Southern Tier have received 288 loan guarantees worth $42,193,100. They have saved approximately $1,200,000 in fees.
<![if !supportLists]> · <![endif]> Small businesses in the Hudson Valley have received 470 loan guarantees worth $138,450,500. They have saved approximately $4,100,000 in fees.
<![if !supportLists]> · <![endif]> Small businesses in the North Country have received 160 loan guarantees worth $33,015,300. They have saved approximately $990,500 in fees.
<![if !supportLists]> · <![endif]> Small businesses on Long Island have received 567 loan guarantees worth $188,138,800. They have saved approximately $5,600,000 in fees.
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