Small Business Lending Fund Act of 2010

Floor Speech

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Mr. REED. Madam President, we have been debating for weeks now a needed solution to our economic recovery in the United States. We have seen some progress, but it is a long and difficult journey for American families. The depth of the crisis that materialized in the last few years of the Bush administration can't be overcome in just 18 months, although I believe we are headed in the right direction. The legislation we are considering will help us in that journey to recovery.

We have seen, in fact, over the last several months, an increase in private sector jobs. We didn't see that in the last several years of the Bush administration. When President Obama took office, we were losing 750,000 jobs a month and we had 22 straight months of job losses. Now we need to turn that dynamic around by creating private sector jobs, but we have to do much more.

The great engine of private job creation is small business in America. These provisions are aimed to aid small businesses throughout the country. Small business is an engine of growth. It is the place where people will, I think, find employment as we go forward. Our small business community has been hit very hard by the economic crisis, the financial crisis, and the collapse of the credit bubble. Small businesses have lost more than 6 million jobs since December 2007, and we have to start restoring those jobs.

The legislation we are considering--the Small Business Jobs Act--will provide $12 billion in fully paid-for tax breaks for small businesses to bolster confidence in the economy by unlocking frozen credit markets, spurring job creation, and fostering our Nation's burgeoning recovery. These tax incentives will allow small businesses to make investments to help with job growth, purchases, and expansion. I emphasize that these are fully paid for because we have multiple challenges.

I have served long enough to recall in 2000, when we were looking at strong employment growth and a Federal budget surplus, and, in 2009, when President Obama took office, we were looking at a job collapse in many parts of the country and a huge deficit, which is still going on. So we have to consider both as we move forward.

The particulars of this legislation are important to note because they will contribute, I believe, very significantly--and one would hope very quickly--to increased job opportunities throughout the country. The legislation will incentivize investors by giving 100 percent exclusion from capital gains taxes on small business investments. It will create a targeted $30 billion small business lending fund to provide small community banks with the capital to increase their ability to lend to small businesses. This is particularly notable. I must commend Senator Landrieu for her tenacious advocacy of this position, along with Senator Merkley and others. In fact, this is a bipartisan effort. This proposal will put money in the hands of small community banks that want to lend, that have clients, and that do it the old-fashioned way. They look at the books, they know the borrower, they have faith and confidence in that individual, and they are constrained now because they do not have sufficient capital to expand their lending. With this capital, they will be able to expand lending and go right out to the heart of small businesses throughout the country. Madam President, just as in North Carolina, in Rhode Island I have numerous businesses that will come in and say they are very successful, they want to expand, they can hire a few people, but they just can't get the loan from the bank. This will help.

Another provision reduces the tax burden of small businesses by allowing them to carry back general business tax credits to offset their tax burdens from the previous 5 years. Small businesses will also be able to count the general business credits against the Alternative Minimum Tax. That will free up capital for expansion and job growth.

The legislation also increases Section 179 expensing--permitting up to $500,000 in capital investments that businesses can expense to immediately get some tax credit for it. It also extends bonus depreciation, allowing taxpayers to immediately write off 50 percent of the cost of new equipment. We hope that this will have the small businessman or woman buying a piece of equipment which will require, we hope, a manufacturer or assembler somewhere in the United States to call people back to work to meet this new demand.

This is going to increase demand for goods and services, and that is one of the key deficiencies in this current economy. We have a lot of money locked up. It is said, quite authoritatively, that there is about $2 trillion on the balance sheets of corporations throughout the United States that they are not spending. We hope these incentives will produce increased demand which will get them to start spending and provide the kind of private capital investment and momentum that will carry us forward.

As I mentioned before, this Small Business Jobs Act has a $30 billion lending fund that is so critical. More than 10 community banks in Rhode Island, for example, are eligible to receive these funds. I have spoken to many of the bank leaders and they are ready to lend right now. They have customers whom they have great faith in, who have a good business plan and are profitable. In fact, many times business owners are willing to guarantee or to put up even personal collateral to get the loan. Yet the bank says: We can't do that because we have reached the limit based on our capital of what we can lend to small business. This raises those limits, and it is absolutely necessary to do that.

One other important aspect is that this legislation will raise the limits on loans that the Small Business Administration can make and guarantee. Again, another source of tremendous and important funding is being capped now because they can't make big enough loans because there are certain loan limits. It will also extend the elimination of the fees borrowers pay to the SBA. Now we have businesses that may be ready to hire, but they just can't generate the cash to pay the fees. Now they will be able to get the loan, hire the workers, and move forward.

The legislation also supports States because there are many State initiatives. There is $1.5 billion in grants to States that will help in their efforts. There are many States that have programs very much like our Small Business Administration at the Federal level--innovative programs that will be supported.

This legislation has bipartisan support, and that is absolutely necessary. Again, I wish to thank particularly my colleagues who were supportive of the cloture motion that has us now on a path to passage.

I thank them very much for their efforts. They made a decision that will benefit American business across the country, small businesses in particular.

We need to move forward. We need to get this legislation done--I hope this week--as soon as we can. Then we have other legislation we can and should consider. For example, we have a tax extenders bill that will hopefully provide R&D tax credits and other provisions that will help businesses, both large and small but particularly small business.

I urge all my colleagues, now that we feel confident we have the votes, let's move to final passage. Let's give American businesses, particularly small businesses, the help they need to move the economy forward.

I yield the floor.

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