Congressional Report: Efforts to Unfreeze Credit Helped Small Businesses in Oakland County

Press Release

A new Congressional report released today shows that efforts to help small businesses in Oakland County were successful. The report, released by Representative Gary Peters, who sits on the House Small Business Committee, highlights how Oakland County small businesses received an increase in lending of more than 200% as a result of Congressional efforts to unfreeze credit.

On Thursday afternoon, Peters announced the report's findings during a visit to Carlson Metal Products, Inc., a Troy-based manufacturing firm that directly benefited from the lending program.

"The number one concern I heard from small businesses over the past two years has been the lack of capital. The credit markets were frozen, and small companies here in Oakland County couldn't get loans," said Rep. Gary Peters. "We took action to increase access to capital for small businesses, and the numbers are clear: as soon as changes took effect, small businesses here in Oakland County saw a huge increase in lending - and that means more jobs. There is still a lot more work to do to rebuild our economy, but these are positive steps forward."

The report, prepared by Rep. Gary Peters' office using data from the Small Business Administration (SBA) studies the changes in small business lending activity in Oakland County from before and after the credit crisis. Key findings include:

* At the height of the credit crisis, in the Second Quarter of FY2009, Small Business Administration (SBA) backed lending in Oakland County dropped to $4.9 million.

* After the Recovery Act went into effect, including key provisions to help small businesses access capital, lending jumped to $13.9 million in the Fourth Quarter of FY2009.

* Under the Small Business Jobs Act, passed in late 2010, small businesses in Oakland County received more loans in the First Quarter of FY2011 than in all of FY2009.

The increase in lending activity was a result of changes to the SBA's 7(a) and 504 programs -- changes that enabled small businesses and banks to more quickly take advantage of improving economic conditions. Specifically, the portion of loan fees paid by the borrower were waived, making loans more affordable, and there was an increase in the government-guaranteed portion of loans backed by the SBA. The 7(a) and 504 programs provide incentive for private sector lenders to work with small businesses by reducing the risk of extending credit to small businesses.

One of the businesses to take advantage of the increase in lending was Carlson Metal Products, Inc. of Troy, MI. Carlson employs nineteen people and manufactures custom metal products for a broad range of customers, including automotive suppliers, robotics and aerospace firms, and medical equipment producers.

John Martin, the President of Carlson Metal Products, said: "I'm grateful for the leadership of Representative Peters in supporting small business owners like me in getting the capital I needed to keep my business growing during the economic downturn. Thanks to these programs, I've been able to retain and hire more employees, and we're now increasing our production and shipping to customers around the world."

In contrast to some other economic recovery efforts, the small business initiatives are private sector-driven lending programs -- not grants or one-time spending.

"This isn't an example of government creating jobs; this is the private sector at work, doing what it does best. Small businesses are the most effective job creators in the country, and if we can give them the tools to do that, they will excel and drive our economy forward," said Rep. Peters.

Since first being elected to represent Oakland County in 2008, Rep. Peters has made small businesses a top priority. His first small business listening tour in 2009 led to the creation of a new small business lending initiative in Michigan that has already resulted in millions in new investment for the state. Peters also helped to write the Small Business Jobs Act, and played a key role in supporting tax cuts to help small businesses cope with the recession.

Rep. Peters joined the House Small Business Committee this year -- a new position which will enable him to continue fighting to help local small businesses gain access to the capital they need. The Small Business Committee has jurisdiction over the SBA and its lending programs.

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