Peters' Small Business Jobs Proposals Moving Through House

Press Release

Representative Gary Peters' proposals to create small business jobs are advancing rapidly in the U.S. House. The House Financial Services Committee, of which Rep. Peters is a member, today approved legislation to promote small business lending using an approach U.S. Representative Gary Peters originally called for last year. The committee also approved an amendment Peters introduced to strengthen state-based small business lending programs.

"Small businesses create two in every three jobs in this country. Helping them innovate and grow has to be our top priority," said Rep. Peters. "Wall Street executives have said to our faces they won't lend to Michigan small businesses. These proposals allow our small businesses to work around Wall Street banks so they can expand and create jobs."

Rep. Peters voted against his party's second stimulus measure in December because he believed it contained too little for small businesses. He then immediately began fighting for an alternative plan embodied in the legislation the committee approved today. The bill calls for helping small, local community banks provide loans to small businesses at reasonable terms.

Rep. Peters' amendment to that bill is modeled after legislation (H.R. 5302) previously introduced by Peters and Reps. Levin and Dingell. Peters' amendment will strengthen state-based partnerships to promote small business lending.

Background on Rep. Peters' Amendment:

Representative Gary Peters' amendment, approved by the House Financial Services Committee, will add the language of the State Small Business Credit Initiative Act (H.R. 5302), introduced by Reps. Gary Peters, Sander Levin and John Dingell, to the small business lending package. The amendment authorizes two types of state lending programs: Capital Access Programs and "other innovative loan programs." Both types of programs efficiently generate large amounts of private financing for small businesses to innovate and create new jobs. These efforts are designed to address critical reasons why the small business lending market is currently frozen -- lack of sufficient capital reserves on the part of lenders, and collateral shortfalls on the part of borrowers. The amendment allows flexibility for states to develop strategies to promote lending specific to the needs of small businesses in their region.

Michigan has been a national leader in developing small business lending programs such as the Michigan Collateral Support Program and the Michigan Supplier Diversification Fund. Projections show that these efforts are responsible for 14,500 jobs created and retained and approximately $140 million in private sector capital made available to small businesses.

* Capital Access Programs: These programs have already been successfully implemented in about 30 states. They create loan portfolio insurance programs for each participating financial institution supported by fees paid by the borrower, the lender, and the state. By bolstering the reserve pools that protect lenders from default risk, states are able to help banks and credit unions expand the range of small businesses to which they are willing to lend.

* Other Innovative Loan Programs: These are new programs developed by the states or existing credit support programs. A state must establish that every dollar of federal investment will be matched by at least one dollar of private funds in each program funded. They must also show that, in total, their programs will support at least ten dollars in private lending for everyone dollar in federal support. Participating lenders must share in the risk of default with the government.

Rep. Peters has fought to make Washington give small businesses the support they deserve:

Since becoming Oakland County's new representative in 2009, making it easier to start and grow a small business in Michigan has been one of Representative Peters' top priorities.

Last year, Peters convened a field hearing in Southfield so that Members of Congress could hear directly from Oakland County small businesses and community banks about the lack of available capital for business lending in Michigan. Deputy Secretary of Commerce Dennis Hightower accepted an invitation from Peters last month to visit Oakland County and take part in a roundtable with small businesses. Peters recently launched a survey of small business owners' opinions on federal policies to be delivered to congressional leaders and Administration officials.

Using the feedback he received from small business owners in Oakland County, Rep. Peters developed a number of proposals to help small businesses innovate and create jobs, such as those approved in committee today. Rep. Peters also wrote and passed a measure to allow small businesses in high unemployment states to access zero-interest loans of up to $75,000, repeatedly supported cutting small business taxes and introduced a bill with Republican Vern Ehlers to reduce costs for small manufacturers participating in the MEP program.

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