Hot Topic: Sen. Olympia Snowe Pushing for a SBA Cabinet Seat
by Christina Lee on December 10th, 2008
To many, Sen. Olympia Snowe (R-Maine) has proven over the past 14 years that her voice can resonate throughout the Senate. Right now however, Snowe has less than six weeks left to see if her recent calls for small business aid have reached the ears of President-elect Barack Obama.
What Snowe wants most is a Small Business Administration (SBA) seat back in the Cabinet – one that President George W. Bush did not elect, and one she and others have sorely missed. Furthermore, elevating the agency’s incoming administrator, she said, “will send a clear signal that small business will drive our nation out of this recession,” as she wrote in a letter addressed to Obama.
At the same time, Snowe has been pushing legislation in hopes of providing more immediate relief. Along with lost lending activity, her ten-step Main Street Economic Recovery Act seeks to recover Small Business Administration funding that has suffered great losses. Over the past eight years, the administration’s budget shrunk by 27 percent – the largest cut of any federal agency.
“When you consider that the SBA budget represents only about 2/100ths of a percent of the total federal budget – yet at the same time small businesses are creating about three-fourths of all new jobs – there is no question that adequately funding the Agency’s small business programs is an investment in America’s economic future,” she said to BusinessWeek.
Traditionally the Small Business Administration’s most popular loan program, 7(a), aims to be “as broad as possible” for start-ups and existing small businesses, according to its official Web site. But over the past year, lending through that program has dropped by 55 percent, as 75 percent of banks reported to the Federal Reserve that they tightened their lending practices.
To stimulate lending activity again, Snowe’s act aims to make Small Business Administration’s loaning processes more efficient. Among other actions, she wants to offer training programs for new lenders, temporarily reduce lending fees by $510 million, and increase the maximum financing that can be secured through one loan – from $2 million to $3 million, according to a press release.
And, with the credit crunch in mind, Snowe also wants to allow borrowers to refinance their 7(a) loans if more favorable terms from another lender are available. Lately, as the Wall Street Journal reported last month, banks and lenders have not been able to re-sell Small Business Administration loans, as their costs have been rising too high to appeal to buyers.
“During these challenging economic times, it is imperative that the SBA … is part of every conversation President-elect Obama has about restoring confidence in the economy,” she said in a statement.