Today the House passed H.R. 3854, the Small Business Financing and Investment Act. This bill, which passed by a vote of 389 to 32, included the bipartisan Massa Amendment which was adopted by voice vote. The Massa Amendment creates a Young Entrepreneurs program in the Small Business Administration to assist and encourage the development of new small businesses started by young people who remain in their local area. This amendment creates a microloan program specifically designed to help curb the so-callled "brain drain" in areas like the Southern Tier where one of our biggest exports is college educated young people.
Below you can watch Rep. Massa present and pass his amendment on the House floor during the amendment process.
"One of the greatest challenges facing rural communities like the Southern Tier of New York is the exportation of our talented young people," said Congressman Eric Massa. "I am proud to have introduced and passed an amendment to establish a Young Entrepreneurs program to retain and draw talented young people to rural areas like my district. This program and this bill are designed to create jobs by helping develop and grow small businesses and I'm glad that we were able to pass this bipartisan legislation today."
Below is a summary of H.R. 3854, the Small Business Financing and Investment Act:
Updating SBA Lending Programs to Better Meet Businesses' Needs
The Small Business Financing and Investment Act reduces paperwork required for SBA loans, making it easier for both small business borrowers and lenders to participate.
The bill helps the SBA act as a matchmaker between lenders and businesses and, in times of tight credit, allows the SBA to step in and fill in the gaps when private lenders stop lending.
H.R. 3854 also increases loan sizes, giving businesses access to larger amounts of capital. Conventional loan size increase by 30% to $3 million; other loan programs will provide as much as $25 million for small manufacturers.
Because businesses' recovery is often vital for communities that are trying to come back from natural disasters, the legislation strengthens the SBA's disaster loan program, providing a one-year deferment on SBA disaster loans. The legislation increases outreach so that, after disasters, small businesses can better take advantage of SBA's existing disaster loan programs. H.R. 3854 also creates a new grant program so small firms can receive grants of $100,000 in order to help them recover from disasters.
The legislation establishes a new training program to encourage lender participation, creating more choices for businesses seeking to acquire SBA-guaranteed loans.
A new program at the SBA will help smaller and solo health practitioners adopt Health Information Technology, improving patient care, reducing health care costs and helping speed the adoption of electronic health records among small practitioners.
Creating Jobs through Small Business Growth
By providing additional technical assistance and training for individuals taking out microloans, H.R. 3854 will ensure more of these new small businesses succeed. The microloan program is an important source of capital for many dislocated workers looking to launch their own business.
For small businesses that are "major employers" in an area, the legislation will allow them to secure loans as high as $25 million. This will help small businesses that are significant contributors to local employment access larger amounts of capital.
Building on the Success of the Recovery Act
The American Recovery and Reinvestment Act, which Congress passed and President Obama signed into law in February, temporarily raised the amount that the government can guarantee on SBA-backed loans to 90%. It also eliminated fees that borrowers normally pay on SBA loans.
H.R. 3854 builds on these successes. By maintaining the higher guarantee, the bill will encourage more financial institutions to loan to small firms. The bill reauthorizes the fee waiver to make loans more affordable for small businesses.
Under the bill, the application requirements for loans through the America's Recovery Capital (ARC) program are reduced, so that businesses can secure these emergency, interest-free loans faster.
H.R. 3854 also raises ARC loan sizes from $35,000 to $50,000, meaning firms can get a larger injection of short-term capital to weather the current downturn.
Delivering Startup Capital to New Ventures
Businesses are also having difficulty raising equity capital. Beginning in the last quarter of 2008, investments in early-stage businesses plunged 26.4%.
To address this shortage, the bill establishes a new Early-Stage Investment Program at SBA, which will pair SBA grants with private venture capital in order to target investment dollars to promising small business startups.
The legislation modernizes the SBA's New Markets Venture Capital (NMVC) program, which steers investment dollars to businesses in low-income areas -- expanding its geographic reach so more businesses around the nation can utilize it.
The bill targets NMVC resources to small manufacturers in low income areas.
The legislation makes improvements to the "Renewable Energy Capital Investment" program in order to increase investment in small enterprises that are researching alternative and renewable energy solutions.
Promoting Entrepreneurship for Veterans, Rural America and Women
As many of our men and women in uniform return from the conflicts in Iraq and Afghanistan, the bill provides tools to help veterans interested in starting their own businesses. For veterans, the legislation offers higher guarantees and lower cost loans, so they can access more affordable capital.
With the creation of a Rural Lender Outreach Program, this bill reduces application burdens for small business borrowers and lenders in these regions, increasing the flow of capital to businesses in rural areas. The Rural Lender Outreach Program also increases loan guarantees, encouraging banks to lend to rural entrepreneurs.
The bill also makes permanent the Community Express program, which promotes lending to small businesses owned by women and economically disadvantaged individuals.