Loan Programs For Small Businesses: A Sound Investment

Loan Programs For Small Businesses: A Sound Investment

By U.S. Rep. Diana DeGette

July 8 , 2004

DENVER, CO - Small businesses are the engine of our nation's economy. Across the United States, there are more than 23.7 million small businesses and combined they generate over half of the Gross Domestic Product. Nationwide, small businesses account for three out of four new jobs that are created.

But these small businesses are suffering in today's uncertain economy. Over the past two years, the number of small business closures has been greater than the number of small business openings. Too many other small businesses cannot afford to hire new workers, provide health care benefits or expand to meet new opportunities.

This week, Congress took two important steps to increase federal support for small business. A bipartisan majority of my colleagues and I voted to restore $79 million in critical funding for the Small Business Administration's (SBA) 7(a) loan program. This program provided 1,237 small businesses in Colorado with the capital they needed to succeed last year.

We also restored funding for the SBA's Microloan Program, which President George W. Bush proposed to eliminate in his 2005 budget. This program, which lends up to $35,000 per small business, gives people who often cannot qualify for conventional loans access to needed capital. Last year, the Microloan Program provided a total of $26.5 million to
growing and newly established small businesses across the nation.

Efforts to eliminate SBA 7(a) and Microloan programs would only add to the significant challenges many small businesses face. For many small businesses, these loans are the only source of affordable, long-term financing. It is also a sound investment for the federal government. Entrepreneurs who want to create or expand their business will end up hiring additional people, purchasing more stock or equipment and strengthen their communities. Without these loans, however, many businesses, particularly in neighborhoods that most need redevelopment, may not survive.
For our economy to prosper and for new jobs to be created, small businesses must thrive. This will not happen if the federal government does not fully invests in small businesses through such successful programs as the SBA's 7(a) loans and Microloans. That is why I fought so hard to protect these critical small business programs and why I am committed to expanding resources for small businesses in the future