Microloan Modernization Act of 2015

Floor Speech

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Mr. MOULTON. Mr. Speaker, I thank Ms. Velázquez for yielding.

Mr. Speaker, we often say that small businesses are the engine of economic growth. That is true; and if you look at the data, new businesses--those younger than 5 years old--created nearly all of our economy's new jobs in the past two decades.

In order to create the conditions for job creation, the Federal Government must increase access to capital so new entrepreneurs with a good idea can take a risk and start a new business. The Small Business Administration's microloan program fills a critical gap in the capital markets, helping underserved businesses that are too small for the banking sector yet too big to finance with a credit card or loans from friends and family.

The program has provided hundreds of millions of dollars in financing and technical assistance to small businesses and entrepreneurs, but the program is in need of reform. That is why I introduced H.R. 2670, the Microloan Modernization Act of 2015, which will make a number of targeted improvements to the program so more borrowers can benefit from access to capital.

First, the bill increases the loan limit cap for intermediary lenders. Many successful intermediaries have hit the current $5 million cap and, as a result, deserving small businesses are denied capital through no fault of their own.

Second, the bill extends the loan repayment period for loans greater than $10,000. This small change will provide borrowers with the flexibility to better manage cash flow, improve operations, and create more jobs.

Third, the bill permits lines of credit, which are currently prohibited by the SBA. Not all businesses need a fixed-rate term loan. Sometimes a more flexible line of credit is the better product for a small business that has cyclic or uneven cash flow.

Fourth, the bill creates a waiver for an overly rigid technical assistance formula known as the 25/75 rule to help intermediaries deploy technical assistance more efficiently.

Lastly, the bill commissions two studies to explore ways to incentivize intermediaries to participate in the microloan program and determine if mandatory savings accounts would benefit entrepreneurs.

The microloan program supported nearly 4,000 small businesses just last year, and two of these successful businesses are located in Lynn, Massachusetts, in my district. Prism Products, an industrial distributor, received a microloan from the SBA to purchase extra inventory. As a result of the loan, owner Lisa Fitzpatrick was able to increase revenue and hire a sales professional with 15 years of experience.

In 2013, local restaurateurs Shawn and Noyan Edmond fulfilled their lifelong dream of opening a Caribbean restaurant in downtown Lynn. The microloan enabled the Edmonds to purchase new kitchen equipment and make renovations to the storefront of Rite Spice Caribbean.

As our economy recovers from the recession, we need more people like the Edmonds and Lisa Fitzpatrick to take a risk and start a business, and we need the SBA microloan program to help them. That is why the Microloan Modernization Act of 2015 is so critical.

In closing, I would like to thank my ranking member, Nydia Velázquez, for her work on this bill; my chairman, Steve Chabot; and my colleagues, Representatives CURBELO, CHU, TAKAI, and RADEWAGEN, for cosponsoring this bill.

I urge my colleagues to support America's newest entrepreneurs and vote ``yes'' on this important legislation.

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