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
February 2, 2004

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

Bush Budget Wreaks Havoc on Small Business

WASHINGTON - Congresswoman Nydia M. Velázquez (D-N.Y.), Ranking Member of the House Small Business Committee, today called the administration's budget request of just $678.4 million for the Small Business Administration (SBA) "a travesty for America's small businesses," and vowed to fight in Congress to restore the agency's funding. The request is almost $120 million short of President Bush's inadequate 2004 request of $797.9 million, with most of the cuts being made to the SBA's access to capital programs.

"The Bush administration consistently talks about its support for small business, but time and time again, it fails to back up its rhetoric with action," Congresswoman Velázquez said. "This budget request confirms what Democrats have believed all along - that President Bush talks a lot about helping small business, but his actions prove this is far from the truth. Even though small businesses are the number one job creator in this country - and jobs are exactly what the American people need right now - the SBA is one of the hardest hit agencies in Bush's $2.4 trillion FY 2005 budget. This shows just how weak this administration's commitment is to small businesses, which are the backbone of the U.S. economy."

In the FY 2005 budget request, the Bush administration made several cuts to the SBA's access to capital programs at a time when these programs are needed most. The SBA's flagship 7(a) Loan Program, which has faced shutdowns, caps and restrictions in recent months, received no funding under the latest Bush budget. Instead the administration proposes to run the program solely through fee increases, substantially raising the cost for small businesses to use the program and taking billions of dollars out of the economy.

Congresswoman Velázquez also took issue with the SBA's statements that lending to minorities has increased by "double digits." Despite the agency's claims, in 2003 lending to minority-owned businesses in the 7(a) loan program actually declined by $200 million.

In addition, the SBA programs that are critical to aiding this nation's low-income and minority communities - the Microloan Program, the New Markets Venture Capital Program, BusinessLINC, PRIME and the Business Information Centers (BICs) received no funding in the administration's recent budget request.

The SBA's Microloan Program provides very small loans to start-ups, and targets mainly low-income entrepreneurs. Last year this vital program provided $26.5 million in loans and an additional $15 million in technical assistance. The Microloan Program enables individuals to become self-sufficient, while creating jobs and contributing to economic development in local communities.

Bush's 2005 budget also provides no funding for the New Markets Venture Capital Company Program, which aims to bring equity investment to low-income communities across the nation. SBA's PRIME (Program for Investments and Microenterpreneurs) for disadvantaged microentrepreneurs and BusinessLINC, a mentoring program for small businesses in low-income areas, were both zeroed out in the Bush administration's 2005 budget request.

"These moves, such as terminating the Microloan Program and increasing borrower fees on small 7(a) loans, are just inconceivable, given the Bush administration's recent push to make more small loans," Congresswoman Velázquez said. "And in proposing to solve the 7(a) loan crisis by raising fees, this administration leaves small businesses shouldering yet another tax. I would like to ask President Bush how he can say his administration helps small enterprise when it continually underfunds the federal agency dedicated to this very mission."

The SBA's mission is "to maintain and strengthen the nation's economy by aiding, counseling, assisting and protecting the interests of small businesses and by helping families and businesses recover from national disasters."

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