ADMINISTRATION ACTING ON PETERS' PROPOSALS TO HELP SMALL BUSINESSES05/07/10
FOR IMMEDIATE RELEASE
Friday, May 7, 2010
CONTACT: Cullen Schwarz
ADMINISTRATION ACTING ON PETERS’ PROPOSALS TO HELP SMALL BUSINESSES
Rep. Peters Called Last Year for Action to Spur Small Business Lending through Small, Local Banks; Administration Unveils Similar Plan Today
Administration’s Plan Also Utilizes State-based Partnerships to Help Small Manufacturers, a Proposal Based on Michigan Members’ Bill
(Washington, D.C.) – The Obama Administration today announced it is sending draft legislation to Congress to help promote small business lending using an approach U.S. Representative Gary Peters originally called for last year. Peters voted against his party’s second stimulus measure in December because he believed it contained too little for small businesses and immediately began fighting for an alternative plan similar to that embodied in the Administration’s initiative unveiled today. The Administration’s plan also includes a strategy to specifically help small manufacturers access affordable credit modeled after legislation introduced by Reps. Levin, Dingell and Peters earlier this year. The House Financial Services Committee may act on the legislation as early as next week.
The Administration’s plan consists of two draft bills. The first bill calls for providing resources to help small, local community banks provide loans to small businesses at reasonable terms.
“Michigan small business owners tell me they are ready to invest and create jobs again if they could just access the credit they need to get started,” said Rep. Peters, a member of the Financial Services Committee. “Unlocking capital for small businesses is critical to creating a climate of job creation, especially in Michigan. Wall Street banks are not lending to our small businesses, so I developed a plan last year to promote small business lending through our local community banks. I am very pleased that I will now be able to work with the Administration, Chairman Frank and others to soon make this plan a reality.”
The Administration’s second bill is modeled after legislation (H.R. 4629) introduced by Reps. Levin, Dingell and Peters that would help create state-based partnerships with financial institutions to specifically help smaller manufacturers access the credit they need to expand and create jobs. Congressman Peters worked with the Administration to encourage them to submit this proposal in tandem with the first small business lending initiative and plans to sponsor this legislation as an amendment to the first bill in committee.
“The Wall Street banks have admitted they have basically redlined Michigan businesses, especially manufacturers” Rep. Peters said. “Our manufacturers are in the process of transforming to create the jobs of the future but this recession severely slowed their progress. There are proven and highly efficient models for partnerships that help get lending to small manufacturers flowing again. The sooner we get those partnerships running at full capacity, the sooner they’ll start creating thousands of well paying jobs.”
The proposal for small manufacturers will provide funding to help states create or continue innovative lending programs that will quickly inject needed capital into small businesses. The State of Michigan has led the nation in designing a program to address collateral shortfalls, creating a state investment fund to provide collateral deposits for a lender with an identifiable revenue stream but whose commercial real estate or equipment has dropped in value because of the economic downturn. This legislation will allow states to create and continue similar collateral support programs.
The plan will also provide resources to states to allow them to create or bolster their Capital Access Programs (CAPs), partnerships among borrowers, lenders and state governments that support increased lending by pooling default risk. Many states have demonstrated tremendous success with these programs, although in states like Michigan budget shortfalls could threaten the continuation of CAP.
Both types of programs efficiently generate private bank financing by addressing critical reasons why lending for small businesses is not adequately available – lack of sufficient capital reserves on the part of lenders, and collateral shortfalls on the part of borrowers.
Since becoming Oakland County’s new representative in 2009, supporting local small businesses has been one of Representative Peters’ top priorities. Last year, Peters convened a field hearing in Southfield so that Members of Congress could hear directly from Oakland County small businesses and community banks about the lack of available capital for business lending in Michigan. Deputy Secretary of Commerce Dennis Hightower accepted an invitation from Peters last month to visit Oakland County and take part in a roundtable with small businesses. Peters recently launched a survey of small owners’ opinions on federal policies to be delivered to congressional leaders and Administration officials.
Using the feedback he received from small business owners in Oakland County, Rep. Peters developed a number of proposals to help small businesses innovate and create jobs, such as those included in the Administration’s proposal announced today. Rep. Peters also wrote and passed a measure to allow small businesses in high unemployment states to access zero-interest loans of up to $75,000, repeatedly supported cutting small business taxes and introduced a bill with Republican Vern Ehlers to reduce costs for small manufacturers participating in the MEP program.
To read the Administration’s draft legislation to promote small business lending through local community banks, click here.
To read the Administration’s draft legislation to help provide access to credit for small manufacturers, click here.