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ICBA Tells Congress Community Banks Have Funds to Lend to Small Business During Credit Crunch

Asks Congress to Bolster SBA Lending Programs

Washington, D.C. (April 16, 2008)—The Independent Community Bankers of America (ICBA) told Congress that despite highly publicized problems with large money-center banks leading to a credit crunch in some financial sectors, common-sense community bank lenders are still well capitalized with money to lend to small businesses. ICBA called on Congress to respond to the credit needs of small business by boosting the Small Business Administration's programs.

"Community banks stick with their local communities and small business customers in good times and in bad," said Cynthia L. Blankenship, ICBA chairman and vice chairman and chief operating officer of Bank of the West, Irving, Texas. Blankenship made her comments before a hearing of the Senate Committee on Small Business and Entrepreneurship held to examine small business lending issues in the current economic and financial climate.

"Small businesses are integral to our economic strength. With the economy softening and employment levels declining for three straight months, we must urgently respond to meet the credit needs of small businesses," Blankenship said. "High fees and other obstacles must be reversed to preserve the affordability and workability of SBA lending programs for community banks and small business borrowers alike. Challenging economic times call for policy responses that address not only Wall Street, but small businesses on Main Street."

"Given declining employment numbers and troubled credit markets, small business access to capital is critical to keeping the economy's gears turning," said Blankenship. "To that end, SBA programs serve a critical role, supplying nearly one-third of the long-term capital to small business. Now more than ever it is vital that SBA programs are robust."

ICBA made several recommendations to boost SBA lending programs. Chief among them are:

  • Authority for SBA to offer a "Low-Doc," expedited 7(a) loan program with an 85 percent guarantee, and lender and borrower fees reduced to half of their current level for small business loans up to $250,000.
  • Restoration of $250 million in funding to help offset and lower the recent sharp fee increases on both 7(a) lenders and borrowers.
  • Speedy enactment of pending SBA reauthorization legislation and improvements in the Small Business Lending Reauthorization and Improvements Act (H.R.1332, S.1256) and the Small Business Lending Stimulus Act, (S. 2612) that would lower SBA loan fees, similar to the successful policy implemented to help the economy and small businesses in 2001.

Read ICBA's complete testimony at www.icba.org.