Issue Position: Small Businesses

Issue Position

Increase Lending to Small Businesses

On the first leg of his Kentucky Jobs Tour in January, Jack heard from numerous small business owners about how hard it is to get a loan these days. In fact, Jack met one man who had been denied for a loan 22 times in the past 18 months. Jack is committed to making more credit available for business owners to hire new workers and expand their business.

Big banks on Wall Street got bailed out by Washington, but community banks are still struggling to make loans. Jack thinks we should never have another bailout like the TARP and he feels it's time to focus on job creation here in Kentucky. Since 97% of Kentucky employers are small businesses, Jack will:

- Create a Small Business Loan Fund, capitalized with $30 Billion (new spending, not TARP)

- Allow small and medium-sized community and regional banks and credit unions (with less than $10 Billion in total assets) to purchase capital at reduced rates from the Treasury.

* Banks and credit unions would get lower rates based on how much small business lending they do.
* Banks and credit unions would have to submit quarterly reports detailing their small business lending activities.

- Allow credit unions to participate in the Fund and raise the cap on member-business lending (MBL) to expand access to credit for small businesses. Current law limits credit-union lending to member businesses to 12.25 percent of the union's total assets and exempts loans under $50,000. Jack would raise that cap to 25 percent and would raise the exemption bar to $250,000.

- This funding would complement efforts to expand lending through the Small Business Administration (SBA) by reducing fees and increasing guarantee levels. Jack would:

* Increase the loan limit on 7(a) loans from $2 million to $5 million;
* Increase the loan limit on 504 loans from $1.5 million to $5.5 million;
* Increase the loan limit on microloans from $35,000 to $50,000 and increase the maximum loan made to a microloan intermediary from $3.5 million to $5 million;
* Allow the 504 loan program to refinance short-term commercial real estate debt into, long-term, fixed rate loans;
* Extend the authorization to provide 90 percent guarantees on 7(a) loans and fee elimination for borrowers on 7(a) and 504 loans through December 31, 2010; and
* Direct the SBA to create a website where small businesses can identify lenders in their communities.

- Total estimated job creation -- 324,000 jobs nationwide; 4,860 jobs in Kentucky.

Cutting Red Tape and Reducing Paperwork for Small Business

Jack understands that the federal bureaucracy is too cumbersome, too complex, and too confusing to efficiently assist most small business owners. Jack thinks this is wrong -- small business owners should be able to reach their goals and access federal resources without confusion, hassle, or delay. Therefore, Jack will:

* Make it a priority to cut federal red tape, reduce paperwork and streamline government services for small business
* Conduct a bottom-up review of the Small Business Administration and related agencies from the perspective of a small business owner in order to optimize the delivery of services
* Designate a member of the Senator's staff specifically to reach out and work with Kentucky small businesses, helping them to navigate federal programs and highlighting policy areas in need of improvement

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