Microloan Improvement Act of 2021

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 1502) to amend the Small Business Act to optimize the operations of the microloan program, lower costs for small business concerns and intermediary participants in the program, and for other purposes.

Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material on the measure under consideration.

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

Madam Speaker, I rise in support of the bill before us today, H.R. 1502, the Microloan Improvement Act of 2021.

Today, we are considering four bipartisan bills that were approved by the Small Business Committee and the full House of Representatives last year. I am proud of the committee's work on behalf of small businesses and pleased that we worked together to get things done. Our small businesses deserve nothing less.

I would like to thank the chairwoman, Ms. Velazquez, for giving me the opportunity to manage time today on these four important small business bills.

I would also like to thank the ranking member, Mr. Luetkemeyer, who will be handling the floor proceedings today with me.

Prior to the COVID-19 pandemic, the Subcommittee on Economic Growth, Tax, and Capital Access, under the leadership of Mr. Kim, held a hearing on the microloan program, where we heard from a panel of intermediaries who reported that many of the program's rules, largely unchanged since 1991, are outdated and restrict them from meeting today's demand for start-up financing and providing more technical assistance.

In response, Mr. Kim crafted the Microloan Improvement Act of 2020, a series of proposals designed to update the program's rules and, ultimately, help microloan intermediaries extend more affordable capital to first-time entrepreneurs.

I was proud to support the Microloan Improvement Act last Congress and was pleased to see some of its provisions become law as part of the Economic Aid Act last December.

Today's bill, the Microloan Improvement Act of 2021, is virtually the same as last Congress' version without the policies we have already enacted into law.

Madam Speaker, we have heard time and again many entrepreneurs lack the experience needed to demonstrate their creditworthiness to conventional lenders. The COVID-19 pandemic has highlighted these gaps in financing, showing the smallest of small businesses, especially those owned by women and minorities, struggle the most to afford access to capital.

The microloan program is uniquely suited to address this problem, and today's bill strengthens the program and is long overdue.

I encourage my colleagues to support the bill.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I yield such time as she may consume to the gentlewoman from Illinois (Ms. Newman).

Madam Speaker, I have no further speakers and I am prepared to close. I reserve the balance of my time.

Madam Speaker, I yield myself the balance of my time.

As the small business economy starts to recover from the COVID-19 pandemic, entrepreneurs will need as many affordable capital options as possible. That is why the Economic Aid Act included PPP updates, grants for hard-hit venues, and other enhancements to SBA's business loan programs, including the microloan program.

Today's bill takes the next step after that relief effort toward fully modernizing and optimizing SBA's microloan program. For nearly 30 years, this program has had a strong track record of success and has helped to launch many successful small businesses, especially those owned by women and minority entrepreneurs. The record is full of success stories as the program has grown from a simple pilot program to a vital lending tool with strong stakeholder and congressional support.

The legislation before us today renews our commitment to startups by easing access to the program for even more aspiring entrepreneurs and making the program nimbler for intermediaries and borrowers alike.

Passing this bill will be another step to help lead our Nation out of this pandemic and build back the economy by embracing America's entrepreneurial spirit.

I applaud the work by Mr. Kim and Mr. Garbarino for their bipartisan work on the microloan program. I encourage all of my colleagues to vote ``yes,'' and I yield back the balance of my time.

Madam Speaker, I rise in support of H.R. 1502--the ``Microloan Improvement Act of 2021,'' revises the microloan program managed by the Small Business Administration (SBA) to provide certain financial assistance to small businesses through designated intermediaries.

Specifically, the bill authorizes an intermediary to offer a line of credit to a small business, and it increases the average amount for loans from an intermediary to participating small businesses that makes the intermediary eligible for a reduced interest rate on SBA loans.

The bill also places limits on the repayment term for a microloan, and it prohibits the SBA from imposing any additional limitation on the term for repayment of a microloan.

Further, the SBA must:

reserve 15 percent of new loan funds that are made available for disbursement as microloans to designated underutilized states and make the remaining 85 percent available for any state;

establish a process for an intermediary to provide the major credit reporting agencies with information about a borrower that is relevant to credit reporting, and

include information regarding equitable distribution of loan funds in its annual report.

The SBA Microloan program approves up to $50,000 to small businesses to provide businesses with working capital, or to purchase inventory, supplies, and equipment.

Loans for $50,000 may not seem like a lot to a small business, but the micro small businesses that fill our neighborhoods would benefit from having access to these funds.

A micro enterprise employs nine people or fewer, and this is the most common kind of private-sector business in the United States.

Small business statistics show that while this might be the most common kind of enterprise, its share of employees is very small, providing only 10.5 percent of all private-sector jobs.

The fortunes of micro businesses during COVID-19 has been fraught with risks.

We know that:

82 percent of businesses that fail do so because of cash flow problems;

Small businesses employ 59 million people in the U.S.A;

50 percent of all small businesses are operated from home;

84 percent of small business owners indicate that they're feeling optimistic about the future of their companies;

64 percent of small business owners begin with only $10,000 in capital;

Approximately a quarter of small businesses begin with no financing whatsoever;

Only 40 percent of small businesses are profitable; and

Only 64 percent of small businesses have their own website.

Thousands of minority-owned small businesses were shown to be at the end of the line in applying to the government's Paycheck Protection Program (PPP).

According to an Associated Press analysis of the low-interest government loans, minority owners struggled more than white owners to find banks that would accept their applications; or otherwise were disadvantaged by the terms of the program.

Data from the Paycheck Protection Program released December 1 and analyzed by the Associated Press show that many minority owners desperate for a relief loan did not receive one until the PPP's last few weeks, while many more white business owners were able to get loans earlier in the program.

The program, which began April 3 and ended August 8 and handed out 5.2 million loans worth $525 billion, helped many businesses stay on their feet during a period when government measures to control the coronavirus forced many to shut down or operate at a diminished capacity.

The PPP program struggled to meet its promise of aiding communities that historically have not gotten the help they needed.

The PPP program was especially difficult to access for micro businesses.

A micro business employs nine people or fewer, and this is the most common kind of private-sector business in the U.S. Small business statistics show that while this might be the most common kind of enterprise, its share of employees is very small, providing only 10.5 percent of all private-sector jobs.

As the economy continues to recover, we should not forget that not all businesses will recover at the same rate, just as all workers are not heading back into the workforce with the same opportunities to find or resume employment.

I ask my colleagues to join me in supporting this bill that will provide much needed financial support to our mom and pop businesses.

Madam Speaker, I yield myself such time as I may consume, and I rise in support of H.R. 1502, the Microloan Improvement Act of 2021.

Before I begin, I would like to thank the chairwoman for working in a bipartisan manner on behalf of our Nation's small businesses.

The bills before us today were developed in the 116th Congress and have been updated and reintroduced in this Congress. They focus on the Small Business Administration's existing government guaranteed loan programs. These programs are important resources and tools for the Nation's smallest businesses as they seek out financing.

Now, more than ever, these programs need to be ready for small businesses as they begin and continue to recover from the COVID-19 pandemic. As ranking member of the Committee on Small Business, I want to make sure we focus, or continue to focus on these programs that assist the Nation's small businesses, entrepreneurs, and start-ups.

The first bill is the Microloan Improvement Act. This legislation enhances and expands SBA's microloan program which provides loans of $50,000 or less. This program, which is delivered to small businesses through a partnership with microloan intermediaries, concentrates on low-dollar loans and technical assistance.

When a small business is starting out, counseling and capital assistance are true drivers of continued and prolonged success. H.R. 1502 further enhances the program for micro-borrowers by expanding the repayment terms of the program and providing additional tools in their toolbox.

Additionally, the bill removes the burdensome 1/55th rule that delays dollars from flowing to microloan intermediaries within the first two fiscal quarters of the year and replaces it with an allocation mechanism that will provide more equitable access to all States across the Nation.

I would like to thank Mr. Kim, Mr. Garbarino, Ms. Newman, and Mr. Burchett for concentrating their efforts on this legislation.

Madam Speaker, I urge my colleagues to support H.R. 1502, and I reserve the balance of my time.

Madam Speaker, I yield such time as he may consume to the gentleman from Tennessee (Mr. Burchett), who has been a leader in small business issues.

Madam Speaker, I yield myself the balance of my time.

Madam Speaker, 2020 was a difficult year for small businesses. The COVID-19 pandemic hit small businesses hard. This is especially true for small businesses that were just starting out.

As our country continues to recover, the SBA's programs and resources must be ready to assist the Nation's job creators along the way.

The microloan program is a key tool for many small business owners. The reforms in H.R. 1502 are commonsense improvements that will continue to provide assistance and resources to America's Main Street businesses.

Madam Speaker, I urge and recommend my colleagues to support H.R. 1502, and I yield back the balance of my time.

Madam Speaker, I rise today, excitedly, on behalf of the millions of small businesses across our Nation that are truly suffering from the pandemic and struggling to keep their doors open because support is simply not reaching them.

As a former small business owner, I know firsthand how loans can make an absolutely life-changing difference for an entrepreneur.

However, the reality is that too many small businesses, especially those led by women, or minorities, or those in rural communities, don't have access to the primary lending programs offered by the Small Business Administration or private sector.

Microloans are designed to help start-ups and new small businesses that don't have banking relationships with access to larger capital. But for too many businesses, these microloans have been unreachable.

That is why I am proud to co-lead the Microloan Improvement Act to ensure that, regardless of background or location, every business has equitable access to capital.

With this legislation, we are expanding the number of community-based lenders eligible for the lowest interest rates on loans. That means these lenders can offer lines of credit to more small businesses.

Now more than ever, we have an obligation to remove barriers that prevent small businesses from receiving microloans. With this legislation, we are cutting bureaucratic red tape that has restricted growth and job creation.

From mom-and-pop shops, to family-owned stores, to every small business, they will all benefit. That is why this legislation is supported by Democrats and Republicans, and I am so glad to partner today with my Republican colleagues. I am happy to work in a bipartisan fashion to help our intermediaries provide assistance to our local entrepreneurs.

Let's pass this legislation so we can support the smallest of the small businesses in all of our communities.

Madam Speaker, I thank the ranking member for yielding.

I rise in support of Representative Kim's Microloan Improvement Act. I am proud to be an original cosponsor of this important legislation.

Access to financial capital is essential to the success of America's small businesses and their entrepreneurs. This bipartisan bill is straightforward and effective. It increases the number of nonprofit community-based lenders that can offer loans through the SBA's microloan program.

Representative Kim's bill works in tandem with the Microloan Transparency and Accountability Act, my small business legislation that we will debate shortly, to expand access to financial resources that will help our aspiring small business owners and entrepreneurs chase down the American Dream.

I encourage my colleagues to support this important bipartisan legislation.