Small Business Lending Fund Act of 2010
Floor Speech
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Mr. WARNER. Mr. President, first, I commend my friend and colleague, the Senator from Louisiana, who I know the Senate has heard repeatedly over the last few weeks, relentlessly over the last few weeks, come back time and again and again on this issue around small business. I think many Americans are getting a chance to see what those of us who have the privilege of serving with Mary Landrieu see regularly: This is somebody who does not take no. This is someone I know we sometimes need to prod to come out of her shell. But this is someone who is so passionate about the people of Louisiana and, in her role as Chair of the Small Business Committee, has been a tireless voice for small businesses, not just in Louisiana but in Virginia, New Mexico, all across the country. I want to join the majority leader and others in commending her for her ``stick-to-it-iveness'' on this critical piece of legislation.
I want to add a couple of other comments. I concur as well with the Senator from Louisiana on the issue of 1099s. We do need to have an accurate way to ensure that the standing law that has been the law of the land for 62 years is enforced. But this process of filing a 1099 at a $600 threshold at this moment in time is way overburdensome. I, like the Senator from Louisiana, and I think most Members, heard that loudly and clearly, and we do need to fix that.
I look forward to working with Senator Landrieu. I know Senator Begich and others have been involved in those efforts. I look forward to joining them in this effort.
I want to take a moment or two--our time is about up before we break for our caucus lunches--I think it is important that the pieces of this bill have been emphasized time and again, the lending facility, small businesses that can take capital in if they increase their percentage of lending, this is particularly helpful to small banks that might be in challenging financial times at this point.
The SBA, the replenishment of funding for the SBA, the one message I brought out everywhere across Virginia over the last month and a half was that the SBA today is not your grandfather's or even your daddy's SBA. It is not even 5 years ago's SBA. The SBA, under Administrator Karen Mills, is much less bureaucratic, much more streamlined.
With the work the Small Business Committee has done in terms of upping the guarantees, the SBA's role and the type of businesses the SBA has served during this crisis has expanded dramatically. Look at the number of banks that participate now with the SBA today versus 18 months ago. That remarkably successful effort ground to an immediate halt in June when funding ran out. Why in the heck it has taken us this long simply to replenish that proven program that does not add to the deficit is one of the things that gets a lot of folks in Virginia, Louisiana, and New Mexico scratching their heads.
There is another piece of this bill, one that the chairman was kind enough to work with me and others on, that builds upon an existing initiative in the private sector and I believe in about 26 States, a Capital Access Program, that helps those marginal small business loans become more bankable. I hear the same concerns the Chair of the Small Business Committee hears: A small business cannot get their loans, although I have got to say it is not only the bankers' fault, because, let's face it, a lot of small businesses today are not as financially healthy as they were 2 years ago. If they have real estate as collateral, it has decreased in value. If they are lending on cashflow, that has decreased as well. So how do we take that otherwise healthy small business, in good times and in normal recessions, and not let it fall off the cliff in this deepest recession since the Great Depression?
The Capital Access Program is one place where a borrower will be charged a couple of extra points, we will go in from the government and match those points, and we can create a first-dollar loss, a separate loss reserve pool, for a whole series of loans; another $30- to $60 billion of capacity in that aspect. Finally, what is not to like about the series of small business tax credits that have also been built into this legislation? So I commend the chairperson of the Small Business Committee. I am glad the Senate has come to its senses on this issue. Candidly, I wish we would have passed this legislation last spring, but better late than never.
I want to add two other points that I think are important. One other piece of legislation, a bipartisan piece of legislation that we passed recently--and I would be curious to hear the response of the Chair of the Small Business Committee on this with the financial reform bill, a very important piece of legislation. We set, appropriately, in that financial reform bill the requirement for banks to set higher capital standards. The challenge we have right now is starting to implement those higher capital standards in the trough of the recession. That sends a very mixed message to our bankers and to our regulators. I hope the Chair of the Small Business Committee and I and others can think about how we work with our regulators at the FDIC and the OCC and the Fed to ensure that while we want to build up the capital reserves and make our banks healthier, that some level of forbearance for those small business performing loans that may not meet every covenant in their loan document, because their real estate has depreciated in value, somehow we have to have some flex. Because what we are doing by having the regulators come down so hard on the banks at this point is we are, in many ways, even with this very good program that Senator Landrieu has put out, strangling that recovery because of this mixed message.
The final point I want to make is, with this piece of small business legislation, I think it may be--again, it is not going to be a single silver bullet, but one piece of good news that I do not think we have come back to enough in these discussions is that not only have large banks recovered nicely since the decline, but large cap companies, the Fortune 1,0000 companies, their balance sheets are healthier today than they have ever been. There is north of $2 trillion in cash sitting on Fortune 1,000 balance sheets. One of the things I am looking forward to working with my colleagues on is how we get that cash off the sidelines and invested back in the market. When they invest in the market, and the large companies go to their supply chains, which is the small businesses, those small businesses have to get the credit as well to keep functioning. So this piece of legislation is important not only to small businesses, but as large cap companies start to spend out as well, it is important to the overall economic recovery.
I would ask my friend and my colleague, the leader on this important piece of legislation, if she might have some ideas as well about how we meet that appropriate long-term financial goal of making our financial standards appropriate, but not send this mixed message to regulators so that those small business loans that are still performing have the appropriate forbearance to get through this trough in the recession.
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Mr. WARNER. Mr. President, again I will close my comments and thank the chairman of the Small Business Committee for her leadership on this bill. We would not be here today but for her relentlessness on this legislation.
This legislation has had more hurdles, many of them false hurdles, put in its face, and Senator Landrieu does not know how to say no when it affects the well-being of small businesses, which are the lifeblood of job creation coming out of a recession.
I thank her for her leadership.
I yield the floor.
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