WASHINGTON — President Barack Obama’s $819 billion economic-stimulus legislation passed in a surprisingly partisan vote in the House, where Republicans united in opposition with 11 conservative Democrats. The package includes a number of small-business provisions designed to make loans more affordable.
“The economic-stimulus package includes essential provisions that will help jumpstart lending for small businesses nationwide,” says Senator Mary Landrieu, D-La., chair of the Senate Committee on Small Business and Entrepreneurship. “By reducing fees on government-backed small-business loans, the bill will make new loans more affordable so small businesses can grow and succeed, creating jobs and strengthening the economy.”
The bill includes $515 million to temporarily eliminate fees associated with 7(a) loans, the most common type of Small Business Administration (SBA)-backed loan. Reducing lender fees will help reverse a downward trend in 7(a) lending, stimulating as much as $15 billion in small-business loans, the committee says. Last fiscal year, 7(a) loans decreased by more than $1.6 billion, or more than 30,000 loans. This fiscal year, 7(a) lending is already down by more than 56%.
The package also appropriates $100 million for the temporary waiver of fees on 504 loans, which provide long-term financing to small businesses that are expanding and need to buy equipment, facilities or other fixed assets. Such loans are down 42% this fiscal year compared to this time last year. This funding is estimated to produce as much as $5 billion in small-business loans.
The bill also includes funding for SBA’s Microloan Program, which provides small loans to qualifying small businesses. It includes $6 million for the program to handle the increase in demand from microbusinesses that have been crowded out of other financing sources as a result of the credit crisis. This funding will help leverage an additional $51 million in microloans, creating or retaining an estimated 10,000 jobs. The bill also provides $24 million for complementary counseling.
The $819 billion stimulus package has attracted criticism from Republicans and some Democrats for spending billions of dollars on initiatives such as education, despite questions about whether they would actually create new jobs.
The House plan largely supports Obama’s original proposals, but after the strict partisan vote in the House, he suggested the plan might need some changes. “I hope that we can continue to strengthen this plan before it gets to my desk,” Obama said.
A more bipartisan measure is taking shape in the Senate, and Obama pledged to House and Senate Republicans in closed-door meetings last week that he is ready to accept modifications as the legislation advances.