Witnesses from the lending side discussed the demand for capital and current initiatives to encourage small business lending. Other witnesses reported about the current economic environment and the capital required to hire new workers.
House Small Business Committee Chairman Sam Graves, R-Mo., opened the hearing. He said, “As America seeks to recover from the worst recession since the Great Depression, we will be relying on our nation’s small businesses to help lead the way. For businesses to expand and create jobs, they need adequate financing. However, small businesses are telling us that access to capital remains a hurdle in the current economy, despite rallies on Wall Street and government efforts to loosen credit.
On the other side of the equation are lenders who say they have capital available, but businesses are not as credit-worthy as they were just a few years ago. Banks claim that today’s borrowers have lower credit scores and lower collateral values due to depressed real estate values.”
Lynn Ozer, executive vice president of Susquehanna Bank, Pottstown, Pa., testified during the hearing on the importance of bank lending’s role. “This growth in the 7(a) program is essential to keeping credit flowing to small businesses because the program fills a critical gap for those businesses, particularly startup and early-stage companies that need access to longer-term loans,” he said. “The Small Business Administration, through its private sector lending partners, accounts for well over 40 percent of all long-term small business loans made in America, making the agency the single largest provider of long-term capital to U.S. small businesses.”