WASHINGTON D.C. – At a speech today to the Brookings Institution on job creation, Pres. Barack Obama highlighted the need to help unfreeze the credit market for small businesses by increasing the caps on loans administered by the Small Business Administration (SBA) and waiving certain fees. Legislation authored by U.S. Sen. Sherrod Brown (D-OH), the Small Business Emergency Loan Relief Act, would temporarily raise maximum amounts for loans administered by the Small Business Administration (SBA).

“Small businesses make up the backbone of our economy and small businesses will lead us out of this recession,” Brown said recently. “As we consider additional way to create jobs, we should make sure small businesses have the resources they need to expand operations and create jobs.”

Small businesses have created 64 percent of new jobs nationally over the past 15 years, yet reports indicate banks have significantly cut back on Main Street lending.

As Chairman of the U.S. Senate Banking Subcommittee on Economic Policy, Brown will hold a Senate hearing tomorrow entitled “Weathering the Storm: Creating Jobs in the Recession.” The hearing, to be held in room 538 of the Dirksen Senate Office Building at 2:00 p.m., will feature testimony from economists and venture capitalists, including leaders from the Brookings Institution and The Research Triangle Park.

Brown’s legislation would temporarily raise the maximum loan amounts for the three main Small Business Administration (SBA) loan products: the 7(a) loan, the 504 loans, and the America's Recovery Capital (ARC) Loan Program. The 7(a) loan is SBA’s main guarantee program, which authorizes loans made by SBA partners (banks and other financial institutions) and is guaranteed by the SBA. The 504 loan program uses nonprofit Community Development Corporations (CDCs) to provide long-term fixed-rate loans for assets such as land, structures, and equipment that promote local economic development. The ARC loan program, which was created through the American Recovery and Reinvestment Act of 2009 (ARRA), provides advances of up to $35,000, made by commercial lenders, to small businesses to make loan payments for up to six months.

The Small Business Emergency Loan Relief Act raises the 7(a) loan size from $2 million to $5 million, the 504 loan size from $1.5 million to $4 million, and the ARC loan size from $35,000 to $50,000. The bill also temporarily allows customers to use the 504 loan guarantees to refinance existing business debt, which would help small businesses address cash flow issues.

The legislation builds upon the success of SBA lending through the American Recovery and Reinvestment Act of 2009 (ARRA), which provided $730 million to the SBA to help unlock the small business lending market.

As Chairman of the Subcommittee on Economic Policy, Brown has been examining the effects of the credit crisis on small businesses and manufacturers. On Oct. 9, he convened a hearing entitled “Restoring Credit to Manufacturers,” which featured expert testimony from the manufacturing and banking sectors to investigate ways to reverse the credit crisis. On Nov. 18, Brown participated in a Small Business Financing Forum at the Treasury Department, hosted by Secretary Timothy Geithner and SBA Administrator Karen Mills.

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