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Indiana's Jean Wojtowicz asks Congress to help small businesses create more jobs
Congress should help small businesses recover from the recession, not hurt them by raising fees charged to borrowers of one of the country's most popular business financing programs.
That message was delivered to the House Small Business Committee by Jean Wojtowicz (wa-tow-wich) board chair of the National Association of Development Companies. The association's members are certified to work with banks to lend funds guaranteed by the U.S. Small Business Administration's 504 loan program.
Wojtowicz, of Indianapolis, also is executive director of the Indiana Statewide Certified Development Corporation, Indiana's largest lender of SBA 504 funds.
She told committee members that raising fees by 38.9 basis points, as proposed in the 2010 federal budget legislation, would negate the positive effects of fee reductions put in force by the SBA earlier this spring.
Wojtowicz, on behalf of NADCO, asked Congress to open up new sources of funding for small and high-tech companies with the greatest potential for creating new jobs.
Potential sources of new funds include: raising the amounts banks and certified development companies could lend to businesses beyond the current maximum of $1.5 million, allowing borrowers to use both the 504 and 7(a) loans for the same project, permitting borrowers with higher net worth to participate in 504 projects and allowing borrowers to tap into their personal lines of equity credit for their businesses.
She also said Congress should give local certified development companies the freedom to perform recoveries and seek settlements from loan guarantors of 504 projects, rather than wait on the slower SBA process. She also said the SBA should not "shy away" from working with the lending programs of other federal credit-granting agencies such as the departments of Agriculture, Treasury and Housing and Urban Development.
"Cooperation would unleash the full power of the federal government to help restart the engine of small business productivity that creates 70 percent of all new jobs," said Wojtowicz.
"Working together, we must be more creative and flexible in serving the needs of new industries. We must tear down the walls of arcane, irrelevant and restrictive regulations or policies that create unnecessary barriers to reaching the industries of the 21st Century economy."
She noted that the SBA has directly assisted in creating over five million jobs in 25 years through its 504 and 7(a) loan programs.
"Few federal agencies can claim this record of accomplishment and impact on our economy," Wojtowicz said.
She said, "The Congress and the Obama administration have worked hard to put more fixed assets and working capital in the hands of small businesses hard pressed by this recession. The stimulus legislation is beginning to favorably impact capital access and job creation. Our industry believes more should be done, and quickly, to help small businesses."
A recent national study of the SBA 504 program demonstrated that borrowing companies return $94 in tax revenue for every $1 of SBA 504 funding they receive.
Wojtowicz told the House committee that the 504 program has never used federal money because SBA guarantees are funded with privately sold bonds.
The SBA is 56 years old, and its major lending programs are more than 20 years old, Wojtowicz said. Updating and modernizing the programs will make them relevant to the 21st Century and assist NADCO members in helping companies create new jobs.
"By working together, we can help get America working," Wojtowicz said.
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