Lawmakers Aim to Boost Small Business Congressional Proposals Would Make Federal Loans More a Part of the Small-Business World

By Amy Kaslow, writer of The Christian Science Monitor | The Christian Science Monitor, April 15, 1993 | Go to article overview

Lawmakers Aim to Boost Small Business Congressional Proposals Would Make Federal Loans More a Part of the Small-Business World


Amy Kaslow, writer of The Christian Science Monitor, The Christian Science Monitor


SMALL business advocates on Capitol Hill, who cheered last month when President Clinton announced plans to make credit more accessible to entrepreneurs, are now proposing a host of measures to ensure its availability.

They have been lobbied by a cross-section of the commercial sector - from the American Cement Alliance to the United States Chamber of Commerce - to enact laws that eliminate obstacles to increased lending.

The uneven economic recovery has made small business a focal point for policymakers, who are eager to buttress this important sector. Small businesses employ two-thirds of the nation's workers and show the greatest promise for job generation.

Government regulations on lenders, low interest rates, and financing risks have discouraged banks from helping to develop start-up firms and small businesses.

Sen. Dale Bumpers (D) of Arkansas, chairman of the Senate Small Business Committee, says the pent-up demand from entrepreneurs "can not be met by the Small Business Administration {that offers a federally backed credit program}, which is making loans in record numbers."

Congressional hearings are exploring two proposed bills and a separate 12-step program for aiding these enterprises.

The House Committee on Small Business recently heard from Federal Reserve Board Chairman Alan Greenspan that "any assessment of the the outlook for the economy as a whole - especially employment - has to focus on the health of our small business sector - including its ability to finance." While he welcomed the president's regulatory changes, he stressed that "legislative action is still required."

For the past decade, the committee's chairman, Rep. John LaFalce (D) of New York, has been pushing to legislate the creation of a federally chartered corporation to help make long-term, fixed-rate loans to small businesses. He wants to help develop the nation's roughly 18 million small businesses that are "the most dynamic" part of the economy, yet are the most limited in their ability to secure financing.

While he has tirelessly reintroduced the bill 10 congressional sessions in a row, Mr. LaFalce believes that he is closer than ever to realizing his goal. He says he has found favor with the Clinton administration, which is now reviewing the plan.

If it is finally passed, LaFalce's bill would establish a private corporation - a so-called government sponsored enterprise (GSE) - that would sell stock to raise private capital, similar to other GSE's such as Fannie Mae {Federal National Mortgages Association}, which supports loans for home ownership. …

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