Motion to Go to Conference on H.R. 2862, Science, State, Justice, Commerce, and Related Agencies Appropriations Act, 2006
MOTION TO GO TO CONFERENCE ON H.R. 2862, SCIENCE, STATE, JUSTICE, COMMERCE, AND RELATED AGENCIES APPROPRIATIONS ACT, 2006 -- (House of Representatives - November 02, 2005)
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Ms. VELÁZQUEZ. Mr. Speaker, today's motion to instruct conferees is about keeping costs down for the American people. Whether it be protecting prices at the gas pump against price-gouging or ensuring entrepreneurs have access to affordable loans, the bottom line is that we must work to relieve our citizens of rising costs.
For aspiring entrepreneurs and small business owners, access to capital is access to opportunity. Unfortunately, right now, businesses all over the country are seeing their capital options dwindle. At the same time, the typical small business owner is paying thousands more than they did last year to receive a loan.
The simple economics of this are that if a small business has to give the government more of their money, not to the banks, like the chairman inferred, but to the Federal Government, then they have less to invest into their business and less to create jobs. This is a loss our country simply cannot afford today.
By not funding the largest long-term lending initiative for small businesses, the 7(a) loan program, this is exactly what is happening. In a little more than a year, costs for lenders and borrowers have increased by 110 percent. These new program costs have already resulted in the termination of important programs that direct capital to rural areas and minority businesses. The situation will only worsen if Congress fails to provide funding.
This winter, it is projected that there will be yet another round of fee increases. In addition, the program will feel even greater cost pressures as the impact of Hurricane Katrina starts to bear down. In the gulf region today, there are over $2 billion in SBA loans. Even OMB acknowledges that significant loan defaults will occur as a result of this year's hurricanes. In fact, some estimates place this amount as high as $500 billion. The program costs that will result will not only affect those firms in the gulf region but will impact businesses in every district across the country as the cost to cover these loans rises.
Without an appropriation, the only way to cover this additional cost will be through more fee increases. Unfortunately, in a little over a year, we have run out of room to increase fees. The results will be program caps, limits on program size, and even the possibility of a shutdown next year. This is something our Nation's small business owners should not have to endure.
Clearly, spending decisions are difficult. However, on this, we should not be penny wise and dollar foolish, and that is exactly what this body will be doing by eliminating the funding for a program that makes up less than two-tenths of a percent of the entire bill but provides 30 percent of all long-term lending for small businesses and is a proven job creator.
I just would like to say to the chairman, how could we say that the program is doing better? The program is not doing better. Small businesses now pay double what they paid last year to get a loan. Of course, the Small Business Administration is going to say that they are doing more loans, but they are not telling us that those loan sizes are much, much smaller. Loans are much smaller, even though the cost of operating a business are much higher, and fewer and fewer lenders are participating in the program.
This is not a program that is doing better. The African-American business owner gets half the loan size than in mainstream business. Is that minority businessperson doing better when they are getting half the loan size that a mainstream business gets? I do not think so.
I would urge my colleagues to vote ``yes'' on the Schwartz-Bishop motion to instruct conferees.
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Ms. VELÁZQUEZ. Mr. Speaker, will the gentleman yield?
Mr. WOLF. I yield to the gentlewoman from New York.
Ms. VELÁZQUEZ. Mr. Speaker, I thank the gentleman for yielding.
Let me just say for the record that I am here not to do the job for banks. I am here to fight to protect small businesses, small businesses that create 99 percent of the jobs in this country.
And let me say, Mr. Speaker, that I will include in the RECORD the letter sent to the gentleman from Virginia (Mr. Wolf) and to the ranking member of the committee, the gentleman from West Virginia (Mr. Mollohan).
Mr. Speaker, that contains 25 groups. They are not banks. They are the National Small Business Association, the National Black Chamber of Commerce, the National Association of Convenience Stores, the National Association for the Self-employed, American Society of Travel Agents, and the list goes on and on. These are 25 national groups in support of restoring the funding for the 7(a).
And let me just also say to you, sir, that the SBA is going to claim that they are doing record levels, of course, because the numbers that they are using, they are comparing their numbers when the program was shut down by SBA. But comparing the last two quarters, SBA lending is actually declining by nearly $50 million in the last quarter alone.
And when comparing the fourth quarter 2005 to the fourth quarter 2004, SBA has done $150 million less in lending to small businesses. SBA claimed that they would do $16 billion, but they were $2 billion below for fiscal year 2005.
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