Small businesses wait on edge as Senate is stuck on loans bill
Small businesses desperate for government help getting loans will have to wait at least until September before Congress moves on ...
Tribune Washington Bureau
WASHINGTON — Small businesses desperate for government help getting loans will have to wait at least until September before Congress moves on long-awaited legislation to pay for higher loan guarantees, lower fees and other breaks.
As the Senate adjourned for its summer recess last week, a key bill to spur lending to small businesses remained stuck in a partisan stalemate.
As a result, the next month or more may be angst-ridden for many business owners. Nationwide, 995 government-backed small-business loans that have been given initial approval since last spring are now stuck in limbo until Congress acts.
Still other small firms are struggling to secure loans from banks and other lenders — but those are harder to get now that federal support has dried up.
"Something has to be done," said Usha Villarreal, who had to pay $11,000 in extra borrowing fees after her government-guaranteed loan to expand her Mission Viejo, Calif., assisted-living business got held up. "Our only other option was to wait in line, and there were 136 other applications ahead of us."
Senate Democrats vowed last week to take up the measure again when lawmakers return to work next month. But they acknowledged it may be difficult to break an ongoing Republican filibuster of the bill, which is caught in partisan squabbling despite its broad popularity.
"We will have to fight this out a step at a time," said Sen. Mary Landrieu, D-La., the bill's author.
For five weeks, progress on the bill had been stalled in the Senate, punctuated by bitter infighting. Landrieu pressed her case late into the night for the small businesses that both parties promote as an engine of the economic recovery.
"If we don't get small business started up again and focus on them and help them, this recession will never come to an end," she said.
The package of small-business proposals before the Senate includes money to allow the Small Business Administration (SBA) to guarantee up to 90 percent of loans made by banks and community lenders to small businesses. Most SBA loans are now available with guarantees of only 50 percent to 75 percent, making them riskier and less attractive to lenders.
The SBA would be allowed to waive points and other fees and reduce down payments on many loans, and set up a fund to provide $30 billion to stimulate small-business lending by community banks.
The House has already passed the measures, but the Senate remains stuck.
Funds to support the SBA guarantees and fee reductions ran out in May and lending to small businesses has dropped precipitously since.
Villarreal, who operates group homes for Alzheimer's disease patients, said she was approved for a loan to buy a property in Mission Viejo last spring, just before the money ran out. She and her husband, who own Golden Coast Senior Living, waited as long as they could but were finally forced to pay thousands extra on their loans in order to complete the deal without backing from the SBA.
"We couldn't wait," Villarreal said. "We would have lost that transaction and lost our escrow deposit and everything else."
Matt Davis, who runs the not-for-profit community lender Southland EDC in Santa Ana, Calif., said he had several clients waiting for Congress to act. If the funding isn't approved soon, he said, one of his clients will have to pay $140,000 in additional fees to keep his planned expansion project alive.
"We're in uncharted territory," Davis said. "It's tough to tell what people are going to do."
The small-business loan assistance ran into trouble in the Senate when members from both parties began attaching amendments to support their favored causes.
The tension escalated into a battle of amendments. The signal that the fighting would create a standstill came when Republicans, whose amendments had been limited by the Democrats, tried to attach controversial measures that they knew the other party would never accept, including one to repeal the estate tax.
Bankers say they are also waiting for Congress to act. Regional banks in particular are eager to begin drawing on $30 billion in federal bailout money that President Obama has asked Congress to make available to community lenders.
Lenders that use the money to make loans to small businesses will get a discount on the interest rate that they must pay to the federal government for borrowing the money.
The fund would provide community banks with the capital they need to safely make loans in an environment where money is tight, said Steve Verdier, chief lobbyist with the Independent Community Bankers of America.
"It would really provide a terrific incentive for community banks to provide those loans," Verdier said.
In Los Alamitos, Calif., Nick Seedorf's quest for a loan to expand his business began in late 2009. His companies, NuCourse Distribution and MyGearStore.com, were turned down by six banks before a seventh approved a loan backed by the SBA.
Before the loan could close, however, the federal program ran out of money. Now, Seedorf said, he's facing an unpleasant choice: wait for the government loan or take a smaller, more expensive one from his bank.
"I don't think we can continue waiting," he said.
Furniture & home furnishings
ABANDONED VEHICLE AUCTION
Acoustic Guitar Lessons at Your Home!!!
Akc Ch sired Bulldog puppy
POST A FREE LISTING