Mr. Chairman, I have an amendment at the desk. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, recent reports on U.S. economic growth are promising and suggest that recovery is taking hold. However, I continue to…
Mr. Chairman, I have an amendment at the desk.
Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, recent reports on U.S. economic growth are promising and suggest that recovery is taking hold. However, I continue to hear from small business owners in my district who are still having a tough time obtaining the business loans that they need today. They have weathered the worst of the storm and are ready to lead our economy to a strong recovery. However, in order to do this, they need capital; capital from loans that banks are unwilling to lend.
As chairman of the Small Business Subcommittee on Contracting and Technology, my subcommittee examines every day how the Federal Government can incentivize business innovation.
For example, last year, with my fellow Virginian Mark Warner, I proposed the Small Business Administration take action on the ARC loan program, a vital loan program that had been delayed months until Congress authorized it. Because of our efforts, soon after the ARC loan program was implemented, and it is expected to create or retain 24,000 jobs and assist 4,900 businesses this year alone.
We must continue to implement these types of small business programs that will unfreeze the small business credit markets. However, as we create this program to increase lending capacity to small banks, we must ensure that it is not another bank bailout.
The amendment I offer today puts controls in place to guarantee the funds in this bill are in fact going to small businesses. First and foremost, we must define what a small business is. If the Small Business Lending Fund is created with the intention to spur small business lending, we must ensure that the funds are in fact lent to businesses that are properly defined as small business. In order to do this, we should use the definition already being used by Federal agencies to determine a business's size.
Second, we want to increase lending volume and open up the credit markets to every qualified small business. To do this effectively, we need to link lending incentives to volume, or in other words, to the number of loans that a bank makes and not just the amount of money lent. If we measure the lending of a bank merely by the amount of money lent, then a bank could make a few large loans and call it a day. Working capital for most small businesses requires small loans, and many times it takes more than one. Thus, to effectively measure if this program is truly supporting working capital efforts, we must certify that the volume of these small loans increases.
Third, in the same vein, a hardened baseline with real meaning must be set when measuring a bank's lending record. Currently, the bill only requires a bank to increase its lending according to its 2009 fourth quarter record. The fourth quarter of 2009 saw a historically low lending rate. Small financial institutions decreased their small business lending by an average of 12.8 percent, and small business lending by large banks dropped by more than 20 percent. To gather a more accurate measure of small business lending, this amendment requires a full year's worth of data to measure a bank's lending report.
Finally, small business lending companies exist only to lend to small businesses. It would be nearsighted not to make these institutions that already have a strong infrastructure and proven ability to lend to small businesses eligible in this bill. My amendment includes small business lending companies with less than $10 billion in assets as qualified financial institutions, alongside community banks and small credit unions.
If our economic recovery is going to translate into economic expansion, we must open up the credit markets to our small businesses who are proven job creators and we must ensure that programs created to provide capital to small businesses take the necessary measures to promote small business lending and not big business bailouts.
I urge my colleagues to support this amendment for our small businesses and for our economic future.
I reserve the balance of my time.
Mr. Chairman, I yield the balance of my time to Congresswoman Velazquez, the chairwoman of the Small Business Committee.
I ask unanimous consent that each side be allocated an additional 2 minutes.
Mr. Chairman, I yield 2 minutes to the distinguished ranking member of the committee, Congressman Graves.
Mr. Chairman, I yield back the balance of my time.