News From Congresswoman
Nydia M. Velázquez
Representing New York's 12th Congressional District - Brooklyn, Manhattan, Queens
Ranking Democratic Member, House Small Business Committee

For Immediate Release
January 7, 2004

Contact: Wendy Belzer, Kate Davis(202) 225-2361

Velázquez Decries Shutdown of Loan Program
Small Businesses will suffer nationwide as access to capital is greatly diminished

WASHINGTON - Congresswoman Nydia M. Velázquez (D-N.Y.), Ranking Member of the House Small Business Committee, today called the administration's latest announcement to shut down the Small Business Administration's (SBA) 7(a) loan program "outrageous," and "detrimental to the growth of this nation's small businesses."

"As the economy struggles to create jobs, now is not the time to cut off small businesses from access to capital," Congresswoman Velázquez said. "Small businesses are the greatest job creator in this country and act as the catalyst of economic growth, yet they need capital to start up and expand. Instead of meeting the capital needs of our small firms, SBA is leaving them with no way to grow. Not only will small businesses feel the negative impact of this decision, but so will the U.S. economy as a whole."

The SBA's decision not to make any loans through its 7(a) loan program comes on the heels of its announcement last week to cap the 7(a) loan size at $750,000, even though small businesses are showing an increased demand for such loans. In addition, SBA made this decision, despite the fact that under the continuing resolution (CR), the agency has already been allocated $30 million of its FY 2003 appropriation. In canceling or returning all pending loan applications, estimated to include more than 1,000 loans worth over $500 million, the SBA risks undermining the future standing of the program and calls into question its integrity in operating its flagship loan program.

"These moves are the Bush administration's latest attempts to gut this critical program," Congresswoman Velázquez said. "The attack began shortly after the president took office with his first budget pushing for new taxes on all 7(a) participants, and was followed last year by a cap that took billions of dollars out of the economy, which could have created valuable jobs at a time when we needed them most."

The 7(a) loan program is SBA's most important lending initiative and is responsible for 40 percent of all long-term lending to this country's small businesses. The Bush administration's funding request for the 7(a) program has steadily declined from President Clinton's last budget request of $11.5 billion for 2001 to its most recent request of $9.3 billion for 2004. This decrease is inconsistent with the demand for 7(a) loans, which has increased to more than $12 billion in 2004.

"Here we have just another example of the ever-widening credibility gap between the Bush administration's rhetoric supporting small businesses, and the reality of its destructive policies on our entrepreneurs," Congresswoman Velázquez. "Democrats in Congress will oppose the move and will use every available avenue to stop it."

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