Schrader Amendment Establishing Small Business Borrower Assistance Program Passes House

Press Release

Today Congressman Kurt Schrader introduced an amendment to HR 5297, the Small Business Lending Fund Act of 2010 to establish a Small Business Borrower Assistance Program. The amendment was adopted unanimously by voice vote.

"The economic downturn has made things increasingly difficult for even the most successful small businesses," said Schrader. "As a small business owner, I'm more than familiar with the strain that a slow economy can place on the growth and success of a small, local business. This amendment recognizes the importance of providing stability to small businesses when times are tough and profit margins are smaller than normal."

Schrader's amendment establishes a Small Business Borrower Assistance Program that will provide small businesses who take out a 7(a) loan in the amount of $300,000 or less with a reserve fund that they can then use at their own discretion to pay principal or interest on their small business loan. 7(a) loans are provided to lenders to encourage them to lend to small businesses with deficiencies in their small business loan applications in turn, allowing them to have access to capital they may not otherwise. Borrowers that enroll in the Small Business Assistance Program will receive a reserve equal to 6 percent of their small business loan principle to help them make payments through the ups and downs of a cash flow cycle.

Small Businesses that apply to the Small Business Lending Fund Act of 2010 will automatically be enrolled in the Small Business Borrower Assistance Program if eligible, unless the business specifically requests otherwise. In order to qualify, borrowers must obtain a qualifying loan within one year after the Small Business Administration issues final regulations for the program.

Source