Klein, Committee Pass Key Bill for Small Businesses

Press Release

Will improve access to credit, provide incentives to community banks

The House Financial Services Committee today passed important legislation co-authored by Congressman Ron Klein (FL-22) to improve access to credit for small businesses. The Small Business Lending Fund Act of 2010 (H.R. 5297) focuses on the important role of community and local banks in providing credit for small business owners, and creates new incentives for these small banks to lend, which will help end the current freeze on credit facing many local small businesses.

"I hear the same thing from small business owners across South Florida -- access to credit is one of the biggest challenges they face," Klein said. "I have been fighting every day to find ways we can meet that challenge and make sure that creditworthy small businesses have access to the capital they need to make payroll, invest in equipment and grow their businesses. Today's legislation is a common-sense solution that will help get credit flowing again. As a voluntary program that is only available to small, local banks, this is the right approach to increase small business lending in our community."

The Small Business Lending Fund Act establishes a temporary Small Business Lending Fund. Small, community banks can access capital from this fund if they increase lending to creditworthy small businesses. This is a voluntary program, so banks that do not see the demand for small business lending do not have to participate.

The more a bank increases small business lending, the lower the interest rate the bank would have to pay. For example, a community bank that is able to increase their small business lending by 10 percent in one year would be able to access capital from the Small Business Lending Fund at one percent interest. Other rates are available on a sliding scale, making this legislation a straightforward approach to getting capital in the hands of creditworthy small businesses. Now that it has passed the Financial Services Committee, H.R. 5297 moves to the full House for consideration.

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