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 11, 2005

CONTACT: Kate Davis, Allyson Ivins, (202) 225-4038

Republicans Vote No on Helping Small Business
GOP Members vote to continue over-charging entrepreneurs

WASHINGTON - Yesterday, Republican Members of the House Small Business Committee gave this nation's entrepreneurs a cold shoulder when they voted against lowering the cost of small business loans. The debate surrounded the roll back of the Bush administration's policy of charging small businesses and lenders additional fees to use the federal government's largest commercial financing, the Small Business Administration's (SBA) largest lending program - 7(a).

The fees placed on small businesses and lenders doubled anywhere from $1500 to $3000. In addition, the FY 2006 budget increased these costs further. For larger loans, fees can now run up to $50,000, which is far above what is charged for most non-SBA loans. These additional fees force entrepreneurs to look elsewhere to less affordable options for accessing capital.

Since these changes were implemented, loans to small business have decreased by nearly half a billion dollars - from $3.94 billion in the 4th quarter of FY 2004 to $3.56 billion for the 1st quarter of FY 2005. These declines have continued into January - lenders have been making only $47 million per day in 7(a) loans, down from over $70 million per day in September when fees were still at their lower levels. In addition, this month's levels are significantly less than they were last January, after the program had shut down and was then re-opened with a severe cap on loan size.

Representative Velázquez, Ranking Member, offered the amendment during the committee's organizational meeting to the oversight plan, which outlines the agenda for the upcoming Congress. The amendment would have put the committee on the record for supporting the reduction of these fees, and restoring the funding that was cut.

Velázquez said, "This amendment will restore SBA's flagship lending program to its original intent, putting affordable capital back into the hands of our nation's businesses. We need to be providing entrepreneurs who could not access traditional capital markets with a source for affordable loans - that is the true purpose of this program."

Unfortunately, the amendment was opposed by all Republican Members. Most disturbing was that this past July, a number of committee Republicans who had originally supported the restoration of funding for the program, yesterday switched their vote. These Members include: Chairman Manzullo, Rep. Roscoe Bartlett (MD), Rep. Sue Kelly (NY), Rep. Steve Chabot (OH), Rep. Sam Graves (MO), Rep. Jeb Bradley (NH), Rep. Steve King (IA), Rep. Thaddeus McCotter (MI), Rep. Marilyn Musgrave (CO), and Rep. Bill Shuster (PA).

"This is outrageous that Republicans would sit back and let our nation's entrepreneurs take on these additional fees, when the cost of doing business is already skyrocketing," Congresswoman Velázquez said. "I will continue to fight to ensure that funding is restored, and that small businesses are relieved of these additional fees."

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