FOR IMMEDIATE RELEASE
ICBA Concerned with SBA’s Disaster Efforts
Recommends Greater Support for Critical SBA Loan Programs
Washington, D.C. (October 6, 2005) - The Independent Community Bankers of America (ICBA) urges Congress to ensure the Small Business Administration (SBA) is providing needed disaster loan assistance to Gulf Coast small businesses.
"The SBA is charged with the serious responsibility of quickly getting disaster loan funding to small business and homeowners impacted by Hurricanes Katrina and Rita," said Camden R. Fine, ICBA president and CEO. "There is a genuine and growing concern that few if any small businesses have received SBA disaster loan approvals or a single check."
"All SBA loan programs will be essential to the recovery and rebuilding in the Gulf Coast disaster zones and Congress should do everything in its power to ensure the SBA and its lender partners have the resources needed to deliver," added Fine.
ICBA's comments come as the House Small Business Committee begins hearings on the Small Business Administration's efforts in the Gulf Coast. ICBA has 120 community bank members impacted by the Gulf Coast hurricanes. These banks helped build many of these communities and are committed to carry out the rebuilding of homes, small businesses, and people's lives. While SBA programs will be needed more than ever, ICBA is increasingly concerned SBA loan programs have been seriously jeopardized in recent years.
SBA's budget has been cut nearly in half in just the past five years - more than any other federal agency. For instance, the popular "LowDoc" loan program was terminated on October 1, and any appropriation for the flagship 7(a) loan program was completely eliminated. The result is that loan fees on borrowers and lenders more than doubled in one year. Without Congressional action, higher 7(a) loan defaults caused by the Gulf Coast disasters will likely cause the SBA 7(a) fees to double again, making the 7(a) loan program prohibitively expensive for both lenders and small business borrowers.
Based on the input from ICBA's community bankers in the gulf disaster zones, ICBA urged Congress to adopt several SBA and small business measures including:
- Authorize an additional $10 billion in SBA special disaster loan authority to be implemented by financial institutions in disaster areas (loan limits up to $250,000 for an individual and $2 million for a business; up to 30-year term; with 85% SBA guaranty).
- Appropriate $150 million to SBA 7(a) loan program to help lower fees on lenders and borrowers. (Especially needed since higher hurricane-related defaults will be counterproductive by automatically increasing fees.)
- Increase the flagship SBA 7(a) loan program authority level by $5 billion to $22 billion.
- Raise the current bank-qualified municipal bond issuance limit to $30 million (and index for inflation).
- Support a special bond issuance -- similar to New York City Liberty Bonds - with $20 billion in tax-free "Disaster Zone Redevelopment Bonds," allowing all financial institutions to invest in these bonds as triple tax exempt/bank-qualified bonds.
The full list of ICBA Gulf Coast disaster policy recommendations is available at www.icba.org.