Dahlkemper's Plan Will Enhance Small Businesses' Access To Capital

Press Release

As part of her ongoing efforts to bolster the small business community, the nation's leading engine for economic growth, Congresswomen Kathy Dahlkemper (PA-03) has introduced The Express Loans Improvements Act, H.R. 4598, to increase the availability and utility of SBA Express loans, a vital source of working capital for small businesses. Rep. Dahlkemper visited the ERIEBANK today to discuss her legislation.

"Small businesses are the foundation of our economy; when small businesses succeed, they create jobs and opportunities in our communities. The tight credit market has limited small businesses' ability to grow and create new jobs in the process. This plan will give small businesses better access to credit and help community banks provide the lending our local economies need to prosper," Rep. Dahlkemper, a member of the House Small Business Committee said.

The Express Loans Improvement Act would make changes to the Small Business Administration's Express Loans program, which gives an established network of lenders greater loan approval responsibility with less bureaucracy and shorter approval times. Under current law, the SBA guarantees up to 50 percent of the loan and the maximum loan size is $350,000.

The Dahlkemper proposal would raise guarantees to 75 percent for two years to address the immediate credit crunch, then to 60 percent in subsequent years, while raising the maximum Express loan value to $1 million. These changes are similar to changes made to the SBA's 7(a) and 504 loan programs earlier this year, which contributed to a 79 percent increase in weekly loan volumes in those programs.

To protect taxpayers, the bill directs the SBA to strengthen collateral rules and requires annual reporting to Congress on progress towards default rate reduction.

"SBA loans represent 40 percent of all small business loans in America; yet in FY 2009, only 18,855 small businesses took advantage of the SBA Express Loan program, down from 39,877 businesses the previous year. That means that fewer businesses are getting the credit they need to get through the recession. That's why we need this legislation to make SBA Express Loans a stronger, more attractive option for businesses and banks to get credit moving and businesses expanding," Rep. Dahlkemper said.

"When small businesses in Erie are strong and expanding, it's good for our bank and for our community," said David Zimmer, president of ERIEBANK. "Congresswoman Dahlkemper's plan will help banks provide small businesses the working capital they need by strengthening the SBA's Express Loans Program and providing added security through increased loan guarantees."

"The credit market is tight and small businesses like mine are feeling the pinch. Access to credit is one of the biggest obstacles facing small businesses today," said Jeff Jones, owner of Elements Board Shop in Erie. "Making SBA-backed loans more attractive to small businesses and banks will help us work together to get businesses the credit we need to expand and create new jobs. Congresswoman Dahlkemper's proposal is timely and necessary help for local businesses."

The Express Loans Improvement Act has been endorsed by the U.S. Chamber of Commerce, the National Association of Government Guaranteed Lenders, Small Business Council of America, American Bankers Association, the American Small Business League, and the Independent Community Bankers of America.

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