Durbin: Improved Access to Credit for Small Businesses Crucial to Job Creation
[ROCKFORD, IL] – Illinois small businesses
would receive a much-needed lifeline if provisions included in the
Senate jobs proposal to improve access to credit and jumpstart job
creation become law, U.S. Senator Dick Durbin (D-IL) said today during
a news conference in Rockford.
“Small businesses
desperately need access to credit in order to grow and hire more
aggressively,” Durbin said. “They are the economic engine of this
country and the key to a true recovery. Job creation is the highest
priority of the people of this country and it is my highest priority in
the Senate.”
Durbin said a Democratic proposal in the Senate,
which he helped write, includes several programs to spur job growth.
One program in particular would focus on helping small businesses
access the credit they need to grow and hire.
In Illinois,
between 2003 and 2006 small businesses created a net increase of over
141,000 jobs. These 258,000 small businesses in Illinois accounted for
over 90 percent of the net jobs created in Illinois over that period,
when the state’s economy was growing. In 2010, however, small
businesses in Illinois and in every other state are struggling to stay
alive.
“If you own a restaurant, you have to pay the rent,
the utilities, the staff, and the food you prepare before your
customers walk in the door, and that requires access to credit. Yet the
Treasury Department reported in December that the 22 banks that
received the most assistance from the taxpayers since the onset of the
financial crisis have cut their small business loan balances by a
collective $11.6 billion since last April. With the big banks using
their money for bonuses instead of small business lending, we need to
create stronger incentives for smaller banks and credit unions to step
in and lend to worthy borrowers.”
Durbin said he is working
with his colleagues in the Senate to make several improvements to the
existing Small Business Administration programs that help small
businesses access the financing they need to expand. He applauded the
Obama Administration’s new proposal to create a Small Business Lending
Pool.
The Obama Administration has proposed a $30 billion
Small Business Lending Pool that community bankers would be able to tap
to write loans for the small businesses in Illinois that are ready to
grow. Banks with less than $10 billion in assets would be able to
access this capital very cheaply—they’d owe five percent back to the
Treasury on whatever capital they take from the pool. However, if banks
lend the money to small businesses, the rate they’d owe back to
Treasury would decrease to as low as one percent. Additionally, the
faster the money is lent, the less the banks would owe back to the
Treasury.
Both the Administration proposal and the Senate
proposal would grant small businesses better access to loans and
community banks would benefit from earning a higher rate of interest on
their loans than they will owe on the capital taken from the pool.
Taxpayers would also receive a small return on that capital borrowed
from the lending pool by the banks.
A number of details still
must be worked out, and meetings are already underway between the
Administration and Congress on how best to craft this legislation and
get it to the President’s desk for his signature. The small business
proposal is a key element of a larger jobs agenda that the Senate
Democrats will continue work on when the Senate reconvenes in April.
The agenda also includes legislation that would:
Durbin is also working on legislation to assist small businesses in
increasing exports through an expansion of the services available
within the Department of Commerce, the Small Business Administration,
and the United States Trade Representative.
“Countless small
businesses are struggling to stay afloat, while others are ready to
expand if we can provide them with the seed money to get moving. We
need to get these programs in place quickly. A jobless recovery is no
recovery at all,” Durbin said.