From Staff Reports
WASHINGTON – The United States Senate Committee on Small Business and Entrepreneurship, led by Chair Mary L. Landrieu, D-La., passed key small business access to capital and disaster recovery bills.
The committee approved S. 511, the Expanding Access to Capital for Entrepreneurial Leaders (EXCEL) Act by voice vote; S. 289, the Commercial Real Estate and Economic Development (CREED) Act by voice vote; the Communicating Lender Economic Activity Records from the Small Business Administration (CLEAR SBA) Act by voice vote; and S. 415, the Small Business Disaster Reform Act by a vote of 11-6.
“When I talk to small business owners in Louisiana and across the country, one of the things I hear most is that access to capital is still a significant challenge,” Sen. Landrieu said. “It is only appropriate that our committee kicked off the 50th National Small Business Week by passing common-sense bills that will help small businesses grow and create jobs. I urge my colleagues to move forward on passing them through the full Congress as quickly as possible.”
The Excel Act would modify the Small Business Investment Company (SBIC) program to raise the amount of SBIC debt the SBA can guarantee from $3 billion to $4 billion. It would also increase from $225 million to $350 million the amount of SBA guaranteed debt a team of SBIC fund managers who operate several funds can borrow.
Under the SBIC program, the SBA licenses, regulates and helps provide funds for privately owned and operated private equity investment firms. SBICs are licensed and regulated by the SBA. SBICs use their own private money, plus money borrowed with an SBA guarantee to invest in small businesses. Typically, an SBIC will borrow $2 of SBA guaranteed funds for every $1 of private capital.
Since 1958, SBICs have invested $56 billion in more than 100,000 small businesses. SBIC’s have funded Apple, Fed-Ex, Callaway Golf, Jenny Craig, and Outback Steakhouse, when they were small businesses.
The CREED Act would extend for five years a provision allowing small business owners to use SBA 504 loans to refinance certain existing commercial mortgages.
The provision, originally enacted as part of the Small Business Jobs Act of 2010, did not become fully operational until February 2012, significantly shortening the period of time that businesses could use 504 loans to refinance qualifying existing debt. It expired on September 27, 2012.
The 504 loan program is a long-term financing tool for economic development that provides small businesses with long-term, fixed-rate loans to help them acquire major fixed assets for expansion or modernization. Certified Development Companies (CDC) work with the SBA and private sector lenders to provide financing to small businesses under the 504 loan program. A CDC is typically a private, nonprofit corporation set up to contribute to the economic development of its community.
In Fiscal Year 2012, the program’s second and final year, the SBA approved more than 2,400 refinancings for over $2.2 billion to small businesses.
The CLEAR SBA Act requires the SBA to establish a searchable online database (“Lender Activity Index”) to provide small businesses and local, state, and federal policy makers with up to date, user-friendly data about SBA lending. This data will be available by zip code, as well as for each of the previous 3 fiscal years.