To provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958 through April 2, 2004.

Mr. President, I want to make a statement about a small business bill that the Senate passed last week. I am referring to H.R. 4062, which, among other things, provides a temporary solution to the administration's self-created funding crisis for the SBA's largest small-business lending program, commonly referred to as the 7(a) Loan program. In many ways, the bill is similar to legislation I introduced four weeks ago, S. 2186. For example, it adopts my provision to keep the 504 program operating through the rest of this fiscal year instead of subjecting the 504 borrowers and lenders to

another series of disruptive temporary extensions. Similar to my bill, it also lifts the $750,000 cap on loans, lifts the restriction on combination or piggyback loans, gets loans to those small businesses denied 7(a) loans since the program shutdown in January, and extends the operation of the SBA overall, including the Small Disadvantaged Business Program and the Surety Bond program.

In general, H.R. 4062 is a step in the right direction and I commend Congressman Manzullo and Congresswoman Velazquez for their work. I do, however, have some concerns about the bill, concerns shared by many in the small business community, and I regret that the Senate Republicans blocked a bi-partisan Snowe-Kerry amendment to address those concerns.

For example, H.R. 4062 did not address the pressing need to correct the outdated funding formula for the SBA's Women's Business Centers program. The law needed to be changed before the Agency awards this year's grants because more than 50 Centers around the country are at risk of losing their matching federal money. I had been advocating for this change since I introduced S. 2186 on March 9, and the Snowe-Kerry amendment included my provision. Unfortunately, one or two Senate Republicans objected to the provision and blocked its passage.

As for the 7(a) Loan Program, I am concerned about the extent of the fee increases, the lack of data justifying the increases, the rapid expansion of the SBAExpress pilot program, and the precedent that these changes will have on developing a workable approach to next year's 7(a) funding problem created by the President's request for zero funding for fiscal year 2005. The Snowe-Kerry amendment took a much more measured approach to the fee increases, adopting the levels supported in S. 2186 and S. 2193, with flexibility for the SBA to increase the fees up to the levels in the House bill should the need arise to keep the program running for the remainder of the year without restrictions. For example, instead of temporarily charging a lender fee on the commercial portion of a combination or piggyback loan of .5 percent, H.R. 4062 charges 40 percent more, imposing a fee of .7 percent. Senator Snowe devised the discretionary stair-step compromise in our amendment and it was preferred by the lending community. It is unfortunate that the lenders may be required to pay higher fees than necessary to reach the goal: Congress seeks to keep access to 7(a) loans available to small businesses for the rest of this year, fiscal year 2004.

The Snowe-Kerry amendment also took a more measured approach in expanding the SBAExpress program. H.R. 4062 includes a controversial provision proposed by the administration that would expand the current SBAExpress reduced guarantee pilot program from loans of $150,000 to $2 million. An increase of 700 percent.

The administration contends that the pilot expansion would only be voluntary and therefore harmless if not used. While SBAExpress has worked well for relatively small loans, those averaging around $150,000, lenders have testified before our Committee that SBA Express is not workable for all sizes of loans and that the volume of SBAExpress loans is not likely to increase. In fact, the smallest SBA lenders, community banks, have testified that to mandate SBAExpress would drive virtually all community banks from the program. Yet the administration argues this voluntary authority is necessary because, when combined with other program changes, it would reduce the subsidy rate, thereby stretching the 7(a) loan funding, getting the program closer to their latest program volume projections.

This can only be true, however, if the volume of SBAExpress loans increase. To date, the administration has not produced any documentation supporting that contention, and the small business lenders fear that the administration will circumvent the requirement that this be strictly voluntary by showing preferential treatment to lenders who use the SBAExpress program. They believe this will occur in order to steer loans away from the regular program, which has a higher guarantee of 75 percent to 85 percent. Congresswoman Velazquez held strong to including very good provisions aimed at protecting the loan program from such tinkering, and she is to be commended for her effective advocacy. Unfortunately, even with these safeguards, I believe it was premature to enact the administration's SBAExpress proposal until better data could be obtained and analyzed. Further, since H.R. 4062 is a temporary extension of SBA's authority until June 4th, 2004, there would have been time for this and other proposals to be properly vetted and, if appropriate, adopted.

Extreme changes like expanding the SBAExpress program 700 percent were driven by the administration. The groups agreed to live with them only because it was better than the alternatives--further reducing the loan cap from $750,000 to $500,000, another shutdown, or the administration's proposal to mandate all loans be made through the 50 percent guarantee SBAExpress program. Let me read to you a few quotes by the small business community that reflect the feelings of many expressed to this Committee:

The Independent Community Bankers of America: ``The ICBA did not oppose a short-term fix bill that would open up much needed lending to small businesses, but only because the alternative pushed by the SBA was far worse and would have choked off lenders' ability to continue making SBA loans. We didn't want to punish small business because of the unwillingness of the SBA to ask for the funds they knew were needed to keep the 7(a) program viable. This bill is only a short term Band- Aid. The ICBA continues to oppose the SBA's efforts to squeeze the 7(a) program out of existence and hopes a genuine good faith resolution can be part of the FY 2005 budget.''

The American Bankers Association as quoted in the ``American Banker'' on April 1, 2004: ``The need to avoid an even lower loan-size cap is why the ABA supported the compromise, despite having serious reservations about the expansion of the SBAExpress and the additional fees on lenders. `We are not totally pleased with it, but we're not going to write a letter opposing it', said Mr. [James] Ballentine [Director of Community Development]. `We believe the lenders bent over backwards to restart this program, and we've seen very little movement on the part of the Agency.'''

Mr. President, we are all glad that the program is back in business for the rest of the year, particularly for the small businesses that have been hung out to dry since the January shutdown of the program. The delays imposed on the FY2004 fix for the 7(a) loan program were unnecessary. There were several opportunities--bills or amendments-- since March 10th to mitigate the funding shortfall or all together fix it, but they've been blocked or stalled.

Mr. President, waiting has a price. Not only to the qualified small businesses waiting for needed loans and for those who had been promised loans in January only to have the administration abruptly impose a crippling loan cap, but also to the taxpayer. If either of the changes Senator Snowe and I had proposed in our bills, S. 2186 and S. 2193, had been enacted as part of H.R. 3195 in mid-March, we could have saved more than $100,000 a day, leveraging at least another $150 million in small business loans in this fiscal year. These delays are fiscally irresponsible.

The Republican obstructionists will justify their delay tactics by arguing that the earlier bills did not solve the entire funding problem for the rest of the year. However, there are numerous problems with such a claim. One, time was of the essence for the small businesses that had been shutout since January. Two, no one knows if the administration's estimates are accurate and the confidence in the econometric model that predicts future program costs has gone down as a result of the SBA's latest estimates. For example, how could imposing a fee on piggyback loans of .5 percent, a fee that will generate new income for the program, not offset the costs at all? And, if that is true, how could additional savings from increasing that fee by 40 percent, to .7 percent be only one one-hundredth of one percent? I don't know of one lender who believes that claim. Three, it would have been better to take a step in the right direction and immediately reduce the cost of the program to the extent possible in order to stretch the lending dollars. This option would have allowed for future refinements while saving precious appropriated dollars in the process. Four,

there would have been (and still are) several other opportunities to make adjustments later in the fiscal year.

With respect to the other important provisions of H.R. 4062, I am glad that the bill includes my measure from S. 2186 that allows the 504 Loan Guarantee Program to operate through the rest of the fiscal year; however, I am very disappointed that, despite bipartisan support, the Republican leadership refused to include a Snowe-Kerry amendment to promote women in business and safeguard one of their only dedicated resources of support: the nationwide network of women's business centers. The Republicans that blocked our amendment--in support of the administration's policy to eliminate experienced, efficient and effective women's business centers in favor of new and untested centers--are potentially depriving thousands of women in business access to much-needed assistance. The Snowe-Kerry amendment, like S. 2267, would have made a small adjustment to the Women's Business Center program that corrects an outdated funding formula, without added cost to the Treasury. The adjustment would have changed the portion of funding allowed for women's business centers in the sustainability part of the program to keep up with the increasing number of centers that will need funding this fiscal year. Without it, all grants to sustainability centers in 39 States could be cut in half--or worse, 23 experienced centers could lose funding completely. Our amendment was a bipartisan compromise intended to maintain an effective women's business center network; a compromise that was agreed to by Chair Snowe, myself, and the bipartisan leadership of the House Small Business Committee. It was supported by women's groups across the country, and it is my sincere hope that my colleagues in Congress will support this change in the very near future.

I thank the broad coalition of small business trade associations that have worked on the various bills and supported the provisions in my bill, S. 2186: The trade association of Women Impacting Public Policy (WIPP) and the National Association of Women's Business Owners (NAWBO), the National Association of Government Guaranteed Lenders (NAGGL), the American Bankers Association, the Independent Community Bankers Association and the U.S. Chamber of Commerce for endorsing the provisions relating to the 7(a) Loan Guarantee Program; WIPP, NAWBO, and the Association of Women's Business Centers for fully supporting the provisions relating to the Women's Business Centers program, as well as the cosponsors of S. 2186. I think anyone who knows of these groups, their members and their leadership, knows that they work very well with both sides of the aisle and with the leadership of our Committee and also the House Committee on Small Business. Working cooperatively in a bipartisan fashion makes good sense and has long been their practice. We all appreciate their work to fix these problems, and for the contribution they make to cultivating small startup and growing small businesses in our communities.

Mr. President, I ask that several letters addressing the issue at hand be printed in the Record. I thank my colleagues for their support of small businesses and for considering immediate passage of this bill.

The letters follow.

March 10, 2004.

Dear Representative: Today, as the House prepares to vote

on H.R. 3915, we are writing to express our concerns with

this legislation. We are very disappointed that it does not

include a SBA 7(a) program solution. Without a solution the

7(a) program will not be allowed to create much needed jobs

to help our economy.

The SBA's flagship 7(a) loan program, the single largest

provider of long-term start-up and expansion loans to

America's small businesses, has been crippled since the

beginning of this fiscal year, when the SBA temporarily shut

it down due to a funding shortfall. When the Agency reopened

the program a week later, it implemented an artificial loan

cap of $70,000--a reduction of more than 50% of the program's

statutory loan limit of $2 million--and a prohibition on

piggyback loans, which would have allowed lenders to make

loans in excess of a loan cap.

Businesses who had already submitted applications for

loans in excess of the new cap were then told their deals

would not qualify for the program. These applicants had gone

through months of financial planning and had been promised

their loans would be approved. Many had already begun

purchasing equipment and hiring employees. If their deals do

not get done, many will lose earnest money they had taken

from personal savings and retirement plans to inject into

these loans.

Other potential applicants who would ordinarily qualify

for the 7(a) program have since been told there is no

alternative to finance their start-up or expansion. The net

result to these small businesses is a loss of faith in the

U.S. government. The net result to the economy is a loss of

jobs.

A solution to this lingering problem does exist and it has

been communicated to the House Small Business Committee. This

proposal has bipartisan support on the Small Business

Committee, as well as the support of banking and small

business trade groups. The proposed solution would increase

fees for lenders to ensure that there is no budget impact. It

would maintain the 7(a) program. However, H.R. 3915 ignores

this solution.

Without a 7(a) solution, approximately $3 billion in loans

will remain unavailable to small businesses for the remainder

of FY 2004--a net loss of approximately 90,000 jobs. We also

fear that if a swift and equitable solution is not enacted,

many 7(a) lenders will flee the program, leaving a void in

availability of the long-term financing that is so crucial to

small businesses' success.

We request that Congress bolster economic recovery and the

small businesses that drive it by enacting a 7(a) program

solution that has the full support of Congress and the

industry.

Sincerely,

American Bankers Association.

America's Community Bankers.

Independent Community Bankers of America.

National Association of Government Guaranteed Lenders.

The Financial Services Roundtable.

Mr. President, I rise today to speak to the approval of H.R. 3915, a bill adopted by the House yesterday to provide a short- term extension of the Small Business Administration, SBA, and all of its programs. In particular, it ensures the continuation of the SBA's 504 loan program, a vital program for small businesses. The bill extends the authorization for the 504 loan program through May 21, 2004, and extends the authorization for other SBA programs, such as the Preferred Surety Bond Program, and Small Disadvantaged Business Program, and the SBA's cosponsorship authority, through April 2, 2004.

On September 26, 2003, the Senate unanimously approved the Small Business Administration 50th Anniversary Reauthorization Act of 2003, S. 1375, which I introduced as the chair of the Committee on Small Business. That bill provides for the 3-year reauthorization of the SBA and its small business programs, including the 504 loan program.

The reauthorization bill will continue the SBA's role in assisting American small businesses to thrive and grow, through the agency's lending and other programs and services. Most importantly, it will enable the agency to help small businesses continue creating new jobs for our economy. According to the SBA, reauthorizing the agency will result in an estimated 3.3 million jobs created or retained over the next 5 years.

While the Small Business Administration 50th Anniversary Reauthorization Act provides for the continuation of these programs, the other body continues to be delayed in its consideration of legislation to reauthorize the agency. The SBA's programs that rely on appropriations have continued since the Commerce, Justice, State and the Judiciary appropriations legislation for fiscal year 2004 was enacted. However, several of the SBA's programs and activities, such as the 504 loan program, do not rely on appropriations. As a result, they are in jeopardy of shutting down without the bill before us today, and that's a result America's small businesses simply cannot afford.

I am confident that we can enact legislation to reauthorize the SBA once the other body has completed work on its version of the bill. In the interim, we must ensure that the SBA can continue to offer the entire range of its programs to our Nation's small businesses, which are the driving force behind our current economic recovery.

The 504 loan program, one of the agency's flagship lending programs, allows small businesses to obtain long-term, fixed-rate financing to purchase land, buildings, or equipment. In the past 4 fiscal years, the SBA has provided guarantees for more than 20,000 loans through the 504 loan program, for a total of approximately $8.6 billion, and these loans have allowed small businesses to create or retain more than 445,000 jobs.

The 504 program relies on fees charged to the program participants, rather than on Federal appropriations charged to the taxpayers, to fund their operation. Because the program relies on Federal funds, the SBA needs legislative authorization to collect the fees that operate the programs and ensure that they function at a zero subsidy rate.

I am also extremely concerned about the SBA's section 7(a) business loan program. I strongly believe that we must act to ensure that the 7(a) program remains a source of long-term capital for small businesses, including those small businesses that need large loans. The 7(a) program is currently suffering from a funding shortfall, as demand for loans has exceeded the available appropriations this year, as it has four times in the last 10 years.

In that regard, yesterday I introduced the Small Business Loan Revitalization Act, S. 2193. I was pleased to be joined in sponsoring that act by my colleagues, Mr. Bond, Mr. Enzi, and Mr. Coleman. With the improvements contained in that act, I am confident that we can soon help the 7(a) program to once again provide the financing that small businesses so desperately need.

We must act today to ensure that the SBA and its programs continue. The bill before us achieves that goal by extending the authorization for the 504 program through May 21, 2004, and for the agency and its other programs through April 2, 2004. That will provide time for the other body to pass its legislation, for us to reconcile the differences, and for the President to sign a long-term reauthorization bill for the SBA.

This legislation is absolutely necessary for America's small businesses. I urge my colleagues to support this bill and thereby ensure that the SBA, and in particular the 504 loan program, will continue to serve small businesses and enable small businesses to obtain the financing they need, as they contribute so greatly to the revitalization of our national economy.

(At the request of Mr. Daschle, the following statement was ordered to be printed in the Record.)

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, it is with great reluctance that I agree to the second short extension of the Small Business Administration. We are here today because this body has not been able to get our job done. All we ever hear from this administration and the majority party is how important small businesses are, but when we have a chance to do something as simple as ensuring small business of the capital they need to survive, no one from the other sides of the aisle is willing to step up to the plate.

The administration's lack of commitment in supporting reauthorizing the Small Business Administration clearly demonstrates a disconnect between what they say and what they are willing to do. The administration has no problem depriving thousands of small businesses of the only affordable lending opportunities open to them. They are unconcerned that their decision to cut the 7(a) program jeopardizes over one-third of all 7(a) loans.

This administration could not care less that thousands of small businesses that were guaranteed loans by Small Business Administration had their loans stripped out from under them and may now face bankruptcy. It does not seem to bother them one bit that they are driving lenders out of the 7(a) program, leaving even more small companies with no resources to build their businesses. You would think that job creation might get President Bush's attention, but his administration is denying small businesses access to $3 billion in loans this year alone, which will result in 90,000 lost jobs.

The administration and the Republican leadership may be perfectly comfortable slamming the door shut on small businesses struggling to compete in the weak economy, but I am not. The 7(a) program has been on life support since January. The Small Business Administration flagship lending program was first shut down in early 2004 due to lack of funds. Small business owners, some who have put down their life savings, some who had plans to expand and hire new employees, some who were going to purchase new equipment found themselves left in the lurch. Even though they had played by the rules, submitted their applications on time and were approved for a loan, the Federal Government failed to honor its commitment to them.

Both fairness and accountability flew out the window when the program was shut down and applications were returned to small business borrowers.

Still today these small businesses are waiting for some relief. When it was reopened, the program saw new restrictions that are still in place. In its current state, the 7(a) program fails to serve the very small businesses Congress had in mind when it created this program in the first place. They are causality of this administration's lack of commitment to small businesses. And that is just plain wrong. We must address this crisis immediately.

Our small businesses do not ask for much. Yet, they give so much in return. They create jobs in our local community. They pave the way for individuals to reach the American dream. They train our workers and generate new ideas. We should be given back giving back to them what they have given to us. And what does this bill give them? It gives them nothing. Now more than ever, our Nation needs small companies to succeed. They are the driving force of job creation in our economy. America's hard-working small businesses should be able to count on Congress to improve the Small Business Administration and its critical programs. Unfortunately, we are failing.

Mr. Speaker, I would like to yield to the chairman of the committee for the purpose of entering into a colloquy.

Would the chairman be willing to assure me that he will work to make changes to the 7(a) lending program by April 2, 2004?

I yield to the gentleman from Illinois.

I thank the chairman. I appreciate his willing to willingness to work this issue out in a timely manner. However, given past experiences with the gentleman and our so-called agreements, I am sure you can understand my need to make this agreement abundantly clear with the gentleman.

Mr. Speaker, small businesses continue to suffer under the current 7(a) program restrictions, and we cannot continue to ignore this issue. It is the most pressing issue that the gentleman have jurisdiction over. I thank the Chairman.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3915) to provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958 through May 21, 2004, and for other purposes, as amended.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, this is a short and simple bill. H.R. 3915 authorizes a general extension of all programs under the Small Business Act and the Small Business Investment Act from its current ending date of March 15, 2004, until April 2 of 2004. This will allow SBA programs that expire on Monday to continue to operate.

In particular, these include the surety bond program which enables small businesses to obtain surety bonds in order to bid on government contracts, cosponsorship authority so that the SBA can host events or print publications with the private sector, and procurement of assistance that is provided to certain small businesses.

H.R. 3915 as amended also authorizes the SBA to charge fees for the 504 loan program with a certified development company until May 21 of 2004.

This program operates solely based on the fees charged by the SBA to certified development companies. If such fees are not extended, there will be no way for certified development companies to make the type of long-term loans that small businesses rely on to create new jobs. The 504 program operates totally upon user fees and has not received an appropriation since 1996.

Unless H.R. 3915 is signed by the President soon, the 504 program will shut down on Monday.

The ranking minority member and I have been working together on finding a solution to the 7(a) problem. Due to a variety of reasons, unfortunately, that solution is not part of this legislation. I pledge to the gentlewoman from New York (Ms. Velazquez) that I will do everything in my power to see to a resolution in the 7(a) problem as soon as possible.

I urge my colleagues to support H.R. 3915.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, will the gentlewoman yield?

I thank the ranking member. I will be willing to enter into a colloquy.

I will assure the ranking member that I will work with her to make changes to the 7(a) lending program by April 2, 2004 that will resolve the problems currently affecting the 7(a) program through the end of fiscal year 2004. I make the sincerest assurance that these negotiations will involve all relevant parties, including House leadership and the White House and that the gentlewoman and her staff will be involved in such negotiations. I truly believe that we can solve this problem together.

I would like to thank the ranking member from New York for entering into this colloquy and resolving this issue amicably.

Mr. Speaker, I yield back the balance of my time.

Mr. President, I want to make a few comments about H.R. 3915 that will be considered by the Senate today. This bill contains two temporary extensions of authority. One that is general, keeping the Small Business Administration and its programs operating through April 2, 2004, and another that is specific to the SBA's 504 Loan Guarantee Program, keeping it operational through May 21, 2004.

I support this bill, and am relieved the 504 Loan Guarantee Program will not lose its authority to keep making loans to small businesses that are growing, creating jobs and helping our communities. However, there are other serious problems concerning the SBA's 7(a) Loan Guarantee Program and Women's Business Centers that are urgent and should be addressed before the Senate recesses tonight for a week. I introduced a bill earlier this week, S. 2186, the SBA Emergency Authorization Extension Act of 2004, which sets forth workable solutions for those issues. At that time I urged my colleagues to take immediate action and consider it. Senator Snowe also introduced a bill this week, S. 2196, which addressed the 7(a) Loan Guarantee Program funding shortfall, which I support and would have supported as an amendment to this extension. Like the small business community, I am disappointed that the bigger solution for small business lending is being delayed another couple of weeks.

Some people think a couple of weeks can do no harm. But in the 7(a) Loan Guarantee Program, small businesses caught in the middle of the administration's funding schemes might not make it. And the funding problems will fester because it will operate at a more expensive cost than if we enacted the temporary program changes that the lending and small business communities support and are strongly urging the Congress to adopt. Two weeks could mean about half a billion in lending. I disagree with the administration's tactics and I hope that during

this next brief extension they will work with the Senate and House committees to pass program changes that resolve these issues fairly, effectively and expeditiously. Their plan does not work and the small business and lending communities are opposed to it. We need a plan that does.

I look forward to working with my colleagues to resolve this as soon as possible.