Legislation introduced to improve SBA Microloan Program

Through the introduction of legislation, the U.S. Congress has taken up the task of making several important changes to the Small Business Administration (SBA) overall, and to the Microloan Program specifically.

As part of the Recovery Act signed into law by President Obama on February 17, 2009, the SBA introduced a program designed to guarantee 100 percent of small business loans with a repayment plan that would have deferred payments until next year.

However, after a long wait for the program to get started, most local business owners that the program was designed to help, found themselves unable to qualify for the loans.

Following a call for action by President Obama last week, the Chair of the Small Business Committee, Senator Mary Landrieu introduced the Small Business Access to Capital Act of 2009 (S. 1832).

If passed, the legislation would revise the definition of a Microloan from $35,000 to $50,000 and increase the amount of Technical Assistance dollars that an Intermediary may receive, from 25% of SBA loans outstanding to 50% of SBA loans outstanding and eliminate the match requirements for the Technical Assistance dollars.

These changes will go a long way to ensure that Microloan Intermediaries can meet the needs of low and moderate-income entrepreneurs.

President Obama also recently announced a major initiative to enable Treasury-certified community development financial institutions to be eligible to apply for capital at a 2% rate for up to 8 years. This change provides much needed access to capital for those institutions serving low-income people and communities.