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
March 10, 2004

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

Velazquez Demands 7(a) Loan Program Fix
Extension of SBA passes House, but fails to solve the SBA's 7(a) loan crisis

WASHINGTON - The House tonight adopted H.R. 3915, a temporary extension of the Small Business Administration (SBA) until April 2, 2004, but only after Congresswoman Nydia M. Velázquez, Ranking Member of the Small Business Committee, secured a commitment from the House leadership that a bipartisan solution would be reached on the SBA's 7(a) loan program by the same date.

"Sadly, the 7(a) program has been on life support since January," Congresswoman Velazquez said. "The SBA's flagship lending program was first shut down in early 2004 due to lack of funds. Small business owners - some who had put down their life savings, some who had plans to expand and hire new employees, some who were going to purchase new equipment - found themselves left in the lurch."

Due to the inadequate requests of the Bush administration, in December, 2003, the SBA announced a cap of $750,000 on all 7(a) loans, and later shut down the program entirely. Even though the 7(a) program resumed in early January, the cap of $750,000 remains in place and the practice of "piggy backing," or allowing 7(a) loans to be used as part of a larger financing package, is prohibited. These two measures jeopardize over one-third of all SBA 7(a) loans, and leave many small firms unable to secure the capital they need to start-up and grow.

Congresswoman Velázquez took issue with H.R. 3915 for failing to take the steps necessary to resolve the 7(a) loan problems faced by many small businesses in this country due to the program's shutdown and subsequent restrictions.

"This bill fails to address any of these complications for small businesses caught in the 7(a) crossfire," Congresswoman Velázquez said. "They are casualties of the administration's lack of commitment to small businesses, and it is just plain wrong. You would think that job creation might get President Bush's attention, but his administration is denying small businesses access to $3 billion in loans this year alone, which will result in 90,000 lost jobs."

Congresswoman Velázquez engaged the Chairman in a colloquy as she pushed for assurances that the 7(a) loan program would be solved in a bipartisan fashion, in consultation with industry leaders by early April. The Chairman and the House leadership promised to work with Congresswoman Velázquez to address the problems currently affecting the 7(a) loan program.

The measure to extend the SBA, H.R. 3915, passed the House Wednesday evening by voice vote.

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