IV

105TH CONGRESS

1ST SESSION H. CON. RES. 85

Expressing the sense of Congress that the Small Business Administration

should appoint a commission to examine the credit needs of small business concerns.

IN THE HOUSE OF REPRESENTATIVES

MAY 21, 1997

Mr. LAFALCE submitted the following concurrent resolution; which was

referred to the Committee on Small Business

CONCURRENT RESOLUTION

Expressing the sense of Congress that the Small Business

Administration should appoint a commission to examine

the credit needs of small business concerns.

Whereas small business concerns are a vital part of the economy and provide most of the new jobs, new products, and

new services created in the United States;

Whereas adequate access to capital is a critical component of

small business formation, expansion, and success;

Whereas many small business concerns are unable to secure

access to credit without some type of Federal assistance;

Whereas access to capital is a particularly acute problem for

minority-owned businesses, women-owned businesses,

small businesses in economically distressed areas, and for
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those individuals without experience in owning and operating a small business concern;

Whereas the primary credit assistance program for general

purpose small business financing is the 7(a) loan guarantee program of the Small Business Administration

(SBA);

Whereas the 7(a) loan program is now operating at a subsidy

rate of 2.5 percent as compared to twice that amount five

years ago, primarily due to quality improvement, reduced

administrative costs, and the imposition of higher user

fees;

Whereas despite these improvements in the 7(a) program, demand exceeds the annual program level permitted by the

amount of Federal dollars appropriated to support the

program, thereby necessitating administrative action to

eliminate otherwise eligible loan applicants twice in the

past three years, including as recently as May 5, 1997;

Whereas a major source of credit assistance for plant and

equipment financing by small businesses is the certified

development company or 504 development company guarantee program of the Small Business Administration;

Whereas the 504 program is now operating at a subsidy rate

of zero as compared to 0.5 percent five years ago, primarily due to quality improvement, reduced administrative costs, and the imposition of higher user fees;

Whereas the 504 program will cease operations at the end of

this fiscal year unless legislation is enacted to extend user

fee charges; and

Whereas the appropriation of additional Federal monies to

expand the 7(a) loan program or mitigate the fees now
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imposed upon participants in the 504 program is very

difficult: Now, therefore, be it

1 Resolved by the House of Representatives (the Senate

2 concurring), That it is the sense of the Congress—

3 (1) the Administrator of the Small Business

4 Administration should appoint a blue ribbon com5 mission to examine the small business need for cred6 it and the ability of the Federal Government to as7 sist in meeting that need, both during the current

8 fiscal year and during future fiscal years;

9 (2) the commission should include individuals

10 with expertise in the delivery of financial assistance

11 to small businesses, and their associations, such as

12 the National Association of Government Guaranteed

13 Lenders, the Independent Bankers Association of

14 America, the American Bankers Association, the Na15 tional Association of Development Companies, and

16 small businesses which customarily use such pro17 grams, and associations which represent them or

18 provide other assistance to them, such as the Na19 tional Federation of Independent Business, National

20 Small Business United, the Chamber of Commerce

21 of the United States, and the Association of Small

22 Business Development Centers;

23 (3) the commission should also include rep24 resentatives of the Small Business Administration,
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1 but the commission should not be deemed to be a

2 Federal entity and thus should not be subject to the

3 customary restrictions imposed upon Federal enti4 ties, including the conduct of meetings or the need

5 for clearance or approval by the administration;

6 (4) the commission should evaluate the dispar7 ate credit needs of different types of small business

8 and their locale, and should examine the broadest

9 possible range of possible solutions, and provide con10 clusions and recommendations thereon, such as, but

11 not limited to, (A) changes in the existing 7(a) and

12 504 programs such as additional user fees, dollar

13 loan limitations per borrower, dollar loan limitations

14 per participating lender, limitations on the use of

15 loan proceeds, and changes in borrower qualification,

16 (B) establishment of new programs such as a

17 government-sponsored enterprise; and

18 (5) the commission should provide a written re19 port within thirty days evaluating short term solu20 tions and within six months evaluating longer range

21 solutions.

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