House Passes Bill to Aid Small Firms in Securing Capital

The House this week passed legislation designed to aid small businesses in securing capital through new community bank incentives, support for state lending initiatives and by opening venture capital markets.

The Small Business Lending Fund Act, H.R. 5297, was approved by a vote of 241-182.

"As our most prolific job creators, small businesses will be central to the recovery of the U.S. economy," said Rep. Nydia Velázquez, chairwoman of the House Committee on Small Business.  "However, for entrepreneurs to expand and create jobs, they need access to financing.  The measure we approved today will make both credit and equity capital available for small firms."

The legislation would establish a new $30 billion lending fund for community banks, which proponents say would provide $300 billion in lending to entrepreneurs.

Rep. Glenn Nye, D-Va., added language during debate on the bill requiring banks to boost their small business lending to qualify for funds. Rep. Kurt Schrader, D-Ore., added an amendment that would establish a new borrower assistance program, providing additional funds to small businesses who take out loans. The funds can be used at the entrepreneur's discretion to reduce their interest rates, defer their loan or cover monthly payments.

The legislation contains provisions aimed at reinvigorating investment in small startups.  By establishing a new "Small Business Early Stage Investment program," funds from the Small Business Administration will be paired with private capital to invest in small startups.

"In a world where revolutionary new products are conceived in dorm rooms and companies are born in garages, we need new ways of meeting businesses' capital needs," said Velázquez.  "The Small Business Early Stage Investment program recognizes this fundamental shift, taking steps to meet the capital needs of new businesses and helping them create jobs."