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
November 22, 2004

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

Congress Fails to Save Critical Small Business Access To Capital Program
Bush administration and House Republicans terminate funding for loan program

WASHINGTON - With the adoption of H.R. 4818, the Consolidated Appropriations Act, which funds the operations for the federal government for FY05, Congress terminated funds for the largest and most successful small business lending initiative - the 7(a) loan program, which provides 30 percent of all long-term lending. Congresswoman Nydia M. Velázquez, Ranking Democrat on the House Small Business Committee, chastised the Bush administration and Congressional Republicans for once again failing to support the largest source of long-term lending for small businesses.

As a result of this latest action, small businesses and their local lenders will be forced to pay the full cost of the program. For a loan of $700,000 this would raise the fees by approximately $3000. Congresswoman Velázquez stated that, "these higher costs, which are nothing more than a new tax, will put small business loans out of reach for many of our nation's entrepreneurs."

This move culminates a four year attack on government lending programs by the Bush administration and Congressional Republicans, including eliminating funding, implementing a series of caps, imposing burdensome restrictions, and shutting down the program in its entirety. This led Velázquez to state, "these moves clearly show that Republicans simply don't believe these programs should operate as public-private partnerships. If the Bush administration continues down this road, our government's historical commitment to small business will be eliminated altogether."

This move is a stark contrast compared to House action earlier this year when an overwhelming bipartisan group of lawmakers, including 87 Republicans, voted to restore funding for the program. The flip flop in position, Velázquez said, "is disappointing that so many of my Republican colleagues, such as the Chairman of the Small Business Committee, who pledged their support for the 7(a) program, when given the chance to stand up and do the right thing, chose partisanship over this nation's small businesses."

With the uncertain state of the economy, small businesses remain the primary catalyst for creating new jobs and generating growth in our local communities. However, these latest developments serve to only hinder small firms' ability to play a prominent role in the economic recovery. As Congress wraps up the lame duck session, Velázquez stated, "It is very unfortunate that as the 108th Congress comes to a close, not only will it go down as the least productive, but also as the one responsible for turning its back on small business lending. This is clearly a growing pattern of failure by the Bush administration and Republicans in Congress to support America's entrepreneurs."

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