Main Street Parity Act

Floor Speech

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Ms. VELAZQUEZ. Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, I rise in support of H.R. 5763, the Main Street Parity Act.

One of the key functions of the SBA is to ensure that small businesses in communities across the country have access to the capital they need to grow and scale their operations.

The SBA has long served this need through its loan guarantee program, including the 504/CDC program. The 504/CDC program supports small businesses in accessing capital for the development of major fixed assets like land, buildings, equipment, and machinery. As part of the program, loans are guaranteed for so-called special use properties like amusement parks, car washes, bowling alleys, and gas stations.

When the special use designation was created in 1996, Congress required businesses developing these properties to pay a special purpose penalty. The penalty requires these businesses to provide at least 15 to 20 percent equity instead of the minimum 10 percent for standard 504/CDC loans.

While the additional equity requirement served an important safeguard for the program when first enacted, we have seen over time that the extra risk is not as great as anticipated.

In the past 30 years, technological developments and time have shown that many of these properties can be successfully repurposed for alternative uses, increasing the market pool of potential buyers.

Further, the charge-off rates for special purpose and standard loans are similar, demonstrating that these loans pose no greater risk than regular 504 loans. Because of its limited risk, the special use penalty is no longer necessary.

H.R. 5763 reduces the minimum equity requirement for special purpose properties to at least 10 percent, in line with the requirement for standard 504/CDC loans. Most importantly, it maintains discretionary authority to require higher equity if deemed necessary. This bill is supported by the National Association of Development Companies.

Madam Speaker, I applaud Chairman Williams' and Representative Simon's bipartisan work on this issue, and I ask all my colleagues to support it.

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Ms. VELAZQUEZ. Madam Speaker, I yield 3 minutes to the gentlewoman from California (Ms. Simon).

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Ms. VELAZQUEZ. Madam Speaker, I yield myself the balance of my time.

Madam Speaker, I, again, thank Chairman Williams and Representative Simon for their bipartisan work on this bill. I encourage all my colleagues to vote ``yes,'' and I yield back the balance of my time.

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