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STATEMENT

of the

Honorable Nydia Velazquez, Ranking Member

Committee on Small Business

“SBA’s Management of its Capital Access Programs"

Wednesday, June 6, 2012

For the past two years, our nation’s economy has experienced steady private sector job growth.  The unemployment rate, which peaked in October 2010 at 10 percent, has fallen by almost two percentage points.  But these gains have not been enough to overcome the high hurdle in unemployment.  If there is any take-away from last week’s disappointing job numbers, it is that we still have a long road ahead of us – with millions of Americans who are seeking work that cannot find it.

This is why small businesses must remain front and center to our recovery.  They remain our single greatest source of new jobs, but in order for entrepreneurs to play their traditional, job-creating role, it is essential that they have access to capital.  It is the “fuel” for innovation and economic expansion across the spectrum of entrepreneurship. 

However, small businesses face real challenges in the capital markets.  While lending conditions and credit standards have improved significantly over the past year, companies’ balance sheets have not yet fully recovered.  Recent economic indicators also raise doubts as to whether the flow of affordable credit will be sustained.

In past recoveries, the Small Business Administration’s Access to Capital Programs have been critical to providing small firms with a stable source of credit.  While the SBA had some success in leveraging these programs during the worst of the downturn, recent polices have stirred some less-than-favorable changes.  Costs in the 7(a) and 504 loan programs are escalating rapidly.  Lending is stagnant, and small-dollar loans to startups are on the decline.   

During today’s hearing, I am hopeful that we will not just tout past successes, but instead focus on what the agency is doing to reverse these negative trends.  These are real problems, and no amount of window-dressing or clever marketing can make-up for the growing gap in small business credit.  Getting loans in the hands of would-be entrepreneurs has never been more important.  Doing so is not just critical to reducing unemployment, but growing our economy for the long term.

On that note, I would like to thank Administrator Mills for appearing before the committee today.  I am interested in hearing your thoughts on how best to meet entrepreneurs’ capital needs so that they can create new jobs.

Thank you and I yield back.