Lipinski Helps Pass Bill Expanding Lending to Small Businesses to Create Jobs

Today, Congressman Dan Lipinski (IL-3) helped pass the Small Business Lending Fund Act, H.R. 5297, to increase access to credit for small businesses to aid in job creation. The bill includes a measure cosponsored by Congressman Lipinski that authorizes the Treasury Department to direct up to $2 billion to state programs that increase lending to small employers. The vote in the House of Representatives was 241 to 182.

“Almost two years after the financial crisis, the fallout from Wall Street’s destructive behavior continues to impact small businesses,” said Congressman Lipinski, who voted against the Wall Street bailout all three times it came to the House floor. “America’s 6 million small employers form the backbone of the American economy and the backbone of our communities, especially in the Third District. Small businesses create two-thirds of new American jobs, jobs that are desperately needed in today’s economy. But because banks remain reluctant to lend, many businesses in the Third District and across the nation are unable to expand or add employees. This bill will help change that by making it easier for high-quality small companies to obtain the financing they need to grow.”

The measure cosponsored by Congressman Lipinski and included in H.R. 5297 is the State Small Business Credit Initiative, H.R. 5302. Funding under this new program would be distributed to states based on a formula that takes into account each state’s job losses, resulting in substantial funding for Illinois’ small businesses.

In addition to providing funding for state lending programs, H.R. 5297 authorizes making up to $30 billion available to community banks and local lending institutions to spur increased lending to small businesses. This will persuade banks to deploy their own resources and could result in up to $300 billion in loans to small firms. The bill encourages increased lending by local institutions with close ties to their communities by lowering the interest rate they pay on the funds if they increase small-business lending, and increasing the interest rate if they fail to lend. It also includes strong oversight provisions, requires that the money be repaid, and contains incentives that strongly encourage speedy repayment.

The bill will also create jobs by increasing investment in high-tech start-up companies with strong growth potential. Working through Small Business Investment Corporations (SBICs) and similar institutions, the legislation leverages private capital to expand investment in small companies. The U.S. Small Business Administration has long operated an SBIC program to increase investment in start-up companies. 

“Nothing is more important right now than job creation,” Congressman Lipinski said. “That means we must ensure small businesses have access to credit and the ability to take advantage of new opportunities and hire new workers. I’m pleased that this bill takes an important and much-needed step in that direction.”

(June 17, 2010)



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