NAWBO Position:
NAWBO supports federal legislation that overcomes the current barriers related to access of capital by women business owners (WBOs).

Background:
The Small Business Administration’s 7(a) loan program was suspended in January because of volume constraints within SBA funding, which had been designated by a series of short-term Continuing Resolutions since October 1, 2003. The funding was based on 2003 levels, which were lower than the needed levels for 2004.

NAWBO Efforts:
During Public Policy Days in March, NAWBO members visited with their legislators to encourage them to vote for the SBA reauthorization to pass an annual appropriation to keep the 7(a) loan program open.

Working with the U.S. Chamber of Commerce, NAWBO signed a coalition letter, which included WIPP (Women Impacting Public Policy) support, which was sent to Sen. Olympia Snowe (D-Maine), chair of the Senate Small Business Committee (see attached coalition letter below).

Current Legislation:
On April 5, 2004, President George W. Bush signed legislation that will increase loan authority for the SBA’s 7(a) loan program by more than $3 billion.

The bill, HR 4062, passed the House in late March, and was passed by the Senate on April 1. This bill increases the 7(a)’s lending authority to $12.5 billion, allowing the program to reach up to 90,000 small businesses in FY 2004.

The legislation will also allow the SBA to remove the $750,000 cap on 7(a) loans, returning it to its previous $2 million level. Lenders will have the option to make SBA Express loans of up to $2 million; piggyback loans will once again be allowed.

This legislation reauthorizes the 504 loan program and the Small Business Investment Company program through the end of the fiscal year. The bill also guarantees that the SBA’s Small Disadvantaged Business and Preferred Surety Bond programs will remain in continual service through the end of June—both would have expired in early April without congressional action.

SBA Administrator Hector Barreto credited Senate Majority Leader Frists and Sen. Olympia Snowe for getting the 7(a) loan program back on track. “Senator Snowe understands that small businesses are America’s job creators,” Barreto said. “Her leadership was critical to the passage of this legislation.”

Sen. Snowe is the chair of the Committee on Small Business & Entrepreneurship and spoke to NAWBO Public Policy Days participants on March 2, 2004.

March 18, 2004

Honorable Olympia J. Snowe
Chairwoman, Committee on Small Business
and Entrepreneurship
United States Senate
Washington, DC 20510

Dear Chairwoman Snowe:

On behalf of the millions of small businesses represented by the undersigned organizations, we would like to thank you for introducing S. 2193, the Small Business Loan Revitalization Act of 2004. The current fiscal year’s funding shortfall for the Small Business Administration’s (SBA) 7(a) guaranteed lending program has already precipitated major restrictions on lending. With that in mind, this coalition supports your legislation that would provide for a short-term increase in fees on lenders as the framework that will expeditiously provide a solution to fully fund the 7(a) program and provide much needed access to capital for small business owners currently being denied loans. We recognize that this is a short term solution to funding the 7(a) guaranteed lending program and look forward to working with you and your colleagues in developing a permanent solution to this important program.

The undersigned associations believe government policies that foster and encourage robust entrepreneurial activity and small business ownership provide the basis for economic prosperity important to the long-term vitality and success of our nation. Many of our small business members indicate that one major obstacle to entry or expansion of a small business is the availability and access to capital for small enterprises.

One important source of funding, the SBA 7(a) guaranteed loan program, plays an important and vital role in providing an alternative means of obtaining capital for many small business owners where funding has not been available through conventional lending methods. However, due to shortfalls in the fiscal year 2004 budget, this program is operating under severe restrictions that will deny entrepreneurs access to sorely needed funds required to start, grow and expand their businesses, thus limiting their contributions to the job growth and economic expansion.

On behalf of these small employers, we feel that your legislation outlines the best possible framework by which the 7(a) lending program will be able to be expeditiously brought back to an unfettered state and minimize any long-term harm to the program. We thank you again for introducing S. 2193, the Small Business Loan Revitalization Act of 2004 and we look forward to working with you on its passage.

Air Conditioning Contractors of America
American Bankers Association
American Veterinary Medical Association
America’s Community Bankers
American Hotel & Lodging Association
American Nursery & Landscape Association
Appraisal Institute
Association of Small Business Development Centers
Asian American Hotel Owners Association
Consumer Bankers Association
Financial Services Roundtable
Independent Community Bankers of America
International Franchise Association
National Association of Government Guaranteed Lenders
National Association for the Self-Employed
National Association of Women Business Owners
National Restaurant Association
National Small Business Association
Small Business Legislative Council
Tire Industry Association
U.S. Chamber of Commerce
United Motorcoach Association
Women Impacting Public Policy