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 31, 2004

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

Velazquez Applauds 7(a) Fix
H.R. 4062 reopens critical small business loan program at full capacity

WASHINGTON - Congresswoman Nydia M. Velázquez (D-N.Y.), Ranking Member of the House Small Business Committee, today applauded the adoption of H.R. 4062 to extend the Small Business Administration (SBA), which included a much-needed fix for SBA's flagship 7(a) loan program.

"One big challenge for small businesses is access to capital," Congresswoman Velazquez said in her statement on the House floor. "That's exactly why the SBA loan programs are so critical. These programs fill a financing gap for small firms, making loans on great ideas that might not have been looked at twice - or invested in at all. In fact, last year, the SBA's 7(a) loan program provided hundreds of thousands of small businesses with billions of dollars that was then pumped back into the U.S. economy."

Congresswoman Velázquez worked closely with the Bush administration, House leadership, and industry officials to negotiate a solution to the 7(a) program crisis. In late 2003, the program was shut down due to lack of funds, and then was later reopened in early 2004 with severe restrictions in place. Small business owners who had applied for loans had their applications returned, and subsequent restrictions barred many of them from even securing the loan they had been depending on.

Most importantly, the bipartisan 7(a) loan solution contained in H.R. 4062 will raise the guarantee fee from $1 million to $1.5 million. This fix will yield at least $12.5 billion in lending authority for SBA in FY 2004, and once signed into law, it will remove the current loan cap of $750,000 from the program and allow combination or "piggyback" loans.

"In H.R. 4062, we ask lenders to shoulder greater responsibility for the program," Congresswoman Velázquez said. "But we are also giving them a new tool by raising the guarantee rate from $1 million to $1.5 million. In doing this, lenders will be able to guarantee more loans, more money will flow into the American economy, and small firms will be able to create more jobs."

By increasing the 7(a) program's lending authority, the SBA will be able to add an additional 30,000 loans this year, which could create or retain an additional half a million jobs by the end of 2004. In addition, SBA and Congress have agreed to continue long-term 7(a) negotiations for FY 2005.

After today's win for small businesses, Congresswoman Velázquez also urged the adoption of the bipartisan SBA reauthorization bill, which was passed unanimously out of the Small Business Committee almost a year ago.
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"I am happy to say - to all those small business owners out there who have suffered - we are going to make the 7(a) loan program whole again with the bill before us today," Congresswoman Velazquez said. "This program - that has helped countless entrepreneurs turn their dreams of business ownership into reality - is back. And hopefully, it is here to stay."

H.R. 4062 also extends the SBA though June 4, and all the lending programs, including SBIC, 504 and the 7(a) through the end of the fiscal year.

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