As the nation observes the 50th annual Small Business Week, Rep. Nydia M. Velázquez (D-NY), the Ranking Democrat on the House Small Business Committee, has introduced two pieces of legislation aimed at fostering entrepreneurship and helping small firms grow and succeed. Cosponsored by other Democratic Members of the Committee, the legislation tackles two areas critical to small business growth: access to capital and fairness in the federal marketplace.
"Small businesses are the engines of economic growth and our best hope for creating new jobs during tough economic times," Velázquez said. "By fostering an environment conducive to entrepreneurship, we can create good paying jobs and lead our nation back toward prosperity."
The credit market for small companies has improved since the financial crisis of 2007 and the ensuing recession. Large banks approved 17.3% of small business loans in May 2013, representing a 7.1% increase from one year ago, in May 2012. However, many companies continue struggling secure credit, especially those pursuing smaller loan sizes. Small Business Administration (SBA) data shows as recently as 5 years ago, small-dollar loans accounted for 80 percent of SBA-guaranteed lending. Today, that figure has dropped to less than 55 percent.
"Startups rely on small loans to get off the ground and create the jobs our economy so badly needs," Velázquez noted. "For our economy to truly recover, the small-loan market needs to be restored."
To create additional options for firms seeking credit, Velázquez has introduced he Strengthening Entrepreneurs' Economic Development (SEED) Act. By establishing a direct lending program at the Small Business Administration (SBA), the legislation would open additional channels of capital to small firms, enabling them to expand and hire.
"Even in good times, finding affordable capital is a challenge for small companies and today it is clear that many financial institutions are not lending to small businesses at the same pace as before the financial crisis," Velázquez noted. "By filling in gaps in the small business credit markets, the SBA can help small companies to enter new markets, develop new products, reinvest in their operations and, ultimately, bring on new employees."
In addition to creating new lending opportunities, Velázquez's second bill would help open the federal marketplace to female entrepreneurs, by creating greater fairness in the procurement process. The Women's Procurement Program Equalization Act would allow agencies to target certain federal contracts to women-owned firms, as is already done for other disadvantaged businesses. Velázquez is the author of the Women's Procurement Program, a recently implemented initiative that has helped federal agencies boost women's participation the federal marketplace.
"With participation in contracting among women-owned enterprises below 4 percent, it is clear that female entrepreneurs are not receiving their fair share of federal projects," Velázquez noted. "By expanding the role of women-owned businesses in the federal market, we can create greater economic opportunity for female entrepreneurs and broaden the pool of companies that do work for the federal government."
Both measures have been referred to the House Committee on Small Business for consideration.