Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, I rise today in strong support of the Manzullo- Velazquez amendment to the fiscal year 2005 Commerce, Justice, State Appropriations Act and mainly to support small…
Mr. Chairman, I move to strike the requisite number of words.
Mr. Chairman, I rise today in strong support of the Manzullo- Velazquez amendment to the fiscal year 2005 Commerce, Justice, State Appropriations Act and mainly to support small business.
This amendment will provide the necessary funding to maintain the integrity of the Small Business Administration's flagship small business lending mechanism, the 7(a) loan guarantee program.
Mr. Chairman, I represent the Territory of Guam, where 90 percent of our businesses are small businesses.
I applaud the bipartisan leadership demonstrated by our dynamic duo, the gentleman from Illinois (Mr. Manzullo) and the gentlewoman from New York (Ms. Velazquez), in constructing this amendment; and I am proud to have worked with my colleagues on the committee, whether participating in hearings or writing letters or meeting with small business owners, so that we can today arrive at a consensus that reflects the needs of the small business community and the role of the Federal Government to help foster growth, innovation and jobs in this important economic sector.
The 7(a) loan guarantee program is a principal source of funding for small businesses, representing 30 percent of all long-term small business borrowing in the United States. Oftentimes, the 7(a) program is the only source for long-term financing on reasonable terms for small businesses, particularly those in poor, rural, and underserved areas. These small firms represent the future of our economy, as they account for 75 percent of all new jobs created in the United States.
Consider these statistics: the current Federal burden for supporting every $100 of a 7(a) loan is 60 cents. Statistics also show that a new job is created in the small business sector for every $33,000 of loans.
Mr. Chairman, that means that it costs the Federal Government only $198 to create an additional job for the economy through the 7(a) program. A Federal program that demonstrates this level of success should never, ever be cut back, but, rather, expanded.
Suspending Federal funding of the 7(a) program will result in an increased cost to small businesses, as banks will pass new costs on to their 7(a) customers in the form of higher fees.
There is also fear that some banks, particularly in poor, rural and underserved areas, will no longer see the incentive of offering 7(a) loans and will suspend this financing mechanism altogether. This will have the effect of halting both economic and job growth at a time, Mr. Chairman, when we are just beginning to recover from the recent economic downturn.
Recognizing the budget challenges this year, the Manzullo-Velazquez amendment modestly proposes to fund the Federal subsidy of the 7(a) program at fiscal year 2004 levels. It is also budget-neutral. This amendment is supported by Democrats and Republicans, by small business owners throughout the country and by banks that offer federally backed financing mechanisms.
Mr. Chairman, this is the right thing to do, and I hope my colleagues will vote in favor of the Manzullo-Velazquez amendment.