By US Rep. Leonard Boswell

National Small Business Week/May 17th through 23rd.

The spirit of entrepreneurship is alive and well in Iowa and across the country. Small businesses create 60 to 80 percent of new jobs and employ over 50 percent of our nation’s workforce. Congress and the Obama Administration must focus on helping businesses obtain credit and raise capital – allowing them to lead the way through our nation’s ongoing economic recovery.

The most recent Federal Reserve Senior Loan Officer Survey found that 40 percent of domestic banks are tightening their lending standards for small firms. Loans that are guaranteed by the Small Businesses Administration (SBA) are also down from previous years. Compared with this period last year, SBA loans are down 44 percent in terms of dollar amounts. Entrepreneurs are struggling to raise the capital necessary to launch new businesses and expand existing ones. In the last quarter of 2008, venture capital investments plummeted 26.4 percent compared to the previous quarter.

Despite these worrisome statistics, there have been recent signs of gradual improvement. The volume of SBA-backed loans has risen more than 20 percent since mid-March, with more than $1.3 billion in new loans approved. The American Recovery and Reinvestment Act has started to revive small businesses through a series of provisions that help owners borrow money and raise capital. The SBA is in the process of finalizing a program, expected to begin this month, which will provide interest-free loans of $35,000 through a “Small Businesses Stabilization Financing Program.” Small businesses will have one year before they need to begin repayment. In addition, the Act makes loans less expensive for small business borrowers by eliminating fees that were previously a built-in part of SBA loans. A 90 percent increase in the amount of SBA-backed loans guaranteed by the government will make it easier for small business to borrow money from local banks, and the Act also contains provisions to help unclog the credit market for small business loans. Finally, the recovery package streamlines the Small Business Investment Company rules, freeing-up equity capital for small firms.

The recovery package takes those initial steps to jumpstart small business growth and the SBA maintains a wide portfolio of programs to help small businesses succeed. The SBA’s 7(a) Loan Guarantee Program helps small businesses that might not otherwise be eligible for loans by providing an incentive for lenders, and its 504 Fixed Asset Financing Program helps small firms obtain the long-term financing they need to grow. A Microloan Program provides start-ups, microbusinesses and growing firms with small-scale, short-term financing.

In addition, the SBA’s Entrepreneurial Development initiatives provide prospective entrepreneurs and established business owners with counseling and technical help. The Service Corps of Retired Executives (SCORE) gives help to entrepreneurs through a network of volunteer mentors with significant business experience, and the SBA’s small business development centers (SBDC’s) provide information and guidance to entrepreneurs at accessible locations. The SBA also oversees a national network of Women’s Business Centers throughout the country, which offer comprehensive training and counseling to women entrepreneurs, in particular those who are economically or socially disadvantaged. The SBA also provides resources to small business investment companies (SBIC’s), which improve the flow of private equity capital to small businesses through a public-private partnership. In summary, the SBA offers a wealth of programs and services to help America’s entrepreneurs. For more information about the SBA, I encourage you to visit www.sba.gov.

We shouldn’t allow statistics and technical information to obscure the fact that small businesses are critical to the enterprising spirit of America and crucial to our nation’s economic recovery and strength. To learn more about how your small business or those in your community can succeed, please contact me at my Washington, D.C. office at 202-225-3806. You can also reach me in Des Moines at 515-282-1909 or toll-free at 1-888-432-1984.