Magazine article American Banker

SBA Head Sees Lawmakers' Plans on Reform Preferable to Clinton's

Magazine article American Banker

SBA Head Sees Lawmakers' Plans on Reform Preferable to Clinton's

Article excerpt

WASHINGTON - The new head of the Small Business Administration says congressional proposals to reform his agency's general business loan program are better than one made earlier this year by President Clinton.

Like the President, Rep. John J. LaFalce, D-N.Y., and Sen. Dale Bumpers, D-Ark., have proposed cutting government guarantees on some SBA loans and setting up new fees. But their proposals are far less drastic than Mr. Clinton's.

"I wholeheartedly believe the proposals of both the Senate and House are vast improvements over the original proposal put forward by the administration," SBA Administrator Erskine B. Bowles told the House Small Business Committee on Thursday.

Less of a Sacrifice

Mr. Bowles and the committee agreed that the congressional proposals would be less painful for the lending industry than the President's plan.

"I'm fearful these [Mr. Clinton's] changes are too onerous and will adversely impact on small-business borrowers," Rep. LaFalce said.

Congress is expected to appropriate about $155 million for the SBA's 7(a) program next year, roughly what the President requested. That's $169 million less than this year's funding, a necessary cut to help reduce the budget deficit, Mr. Bowles told the committee.

Unless some guarantees are cut and unless new fees are added, the SBA would be able to fund only about $3.3 billion of loan guarantees, he said. But demand for the 7(a) loans could be almost triple that, he said.

"I've found no one who doesn't expect demand to be somewhere in the $7 [billion] to $9 billion range," Mr. …

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