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ICBA Says Community Banks Are Key to Robust Small-Businesses Lending

Washington, D.C. (March 2, 2010)—The Independent Community Bankers of America (ICBA) today told the Senate Banking Committee’s Subcommittee on Economic Policy that community banks are the key to boosting small-business lending.

“Even in the midst of this challenging environment, community banks remain committed to serving their local small-business and commercial-real-estate customers, who are pivotal to our country’s economic recovery,” said Eric A. Gillett, vice chairman and CEO of Sutton Bank, Attica, Ohio, on behalf of ICBA. “The overwhelming majority of community banks are well capitalized, well managed and well positioned to lead our nation’s economic recovery.”

Gillett went on to say that community banks believe they are doing a better job of monitoring and offering loans than large nationwide lenders because they are more likely to work one-on-one with customers and have a better understanding of the economic conditions and needs in their communities.

Gillett also mentioned that community banks have witnessed a decrease in demand for loans from qualified borrowers. He said that a healthier economic climate and increased confidence in the future will ultimately improve loan demand, and acknowledged that, if structured properly, the administration’s proposed $30 billion Small Business Lending Fund could be very helpful. Additionally, he said that ICBA strongly supports the extension of the Small Business Administration (SBA) loan-program incentives included in the American Recovery and Reinvestment Act.

ICBA made the following recommendations to the committee in order to help spur small-business lending:

  • Extend the beneficial SBA loan-program incentives, including higher guarantee levels and reduced fees;
  • Extend and expand the Term Asset-Backed Securities Loan Facility program (TALF);
  • Restore reasonable value to Fannie Mae and Freddie Mac preferred stock and restore the dividend payments;
  • Extend the five-year net-operating-loss carryback through 2010;
  • Allow new IRAs as eligible Subchapter S Corporation shareholders and allow community bank S Corporations to issue certain preferred stock, and
  • Preserve the 35 percent top marginal tax rate on Subchapter S income.

To read ICBA’s testimony, visit www.icba.org.