Passage of S. 141 will be the first step in correcting the SBA lending problems plaguing our nation’s small businesses.  This measure encourages the Administration to use a 7(a) subsidy rate model that would more accurately reflect the true cost of the small business loan programs to the taxpayer.  Specifically, it permits the Office of Management and Budget (OMB) and the Small Business Administration (SBA) to use a recently completed econometric model to calculate the credit subsidy rate for the 7(a) small business loan guarantee program. 

Once enacted into law, this measure will allow SBA’s flagship loan program to meet the borrowing demands of our nation's small businesses.  Without this legislation, the program would limit 7(a) loans to less than $5 billion for FY 2003.  Currently, the 7(a) program is operating at a very reduced capacity, with a loan size cap of $500,000, to avoid exceeding the program limitations.  According to a recent GAO study, the current model has also resulted in overcharges or taxes of $1.5 billion over the last 10 years.  By limiting the 7(a) guaranteed small business loan program, we are unnecessarily restricting capital for America’s small businesses to expand and create jobs. 

In 2002, this crucial program backed 51,666 loans worth over $12 billion to small firms nationwide.  Last year, 21 different financial institutions in Rhode Island approved 932 7(a) loans for a total of over $75 million to Rhode Island's small business community.  In fact, 7(a) loans make up nearly one-third of all long-term loans made to U.S. small businesses.  This program is important to every small business in America and deserves our continued support.

Small businesses are the backbone of Rhode Island’s economy and account for more than 98 percent of the jobs in the state.  As a proud member of the Committee on Small Business, I have been extremely concerned about the ability of small businesses to start and grow in the current economic climate.  Now more than ever, Congress must support the growth of America’s small businesses and help stimulate the real engine of this nation’s economy.  For these reasons, I rise in strong support of passage of S. 141 and urge my colleagues to support it as well.