DURBIN: NEW LENDING INITIATIVES NEEDED TO HELP SMALL BUSINESSES MAINTAIN AND CREATE JOBS

[CHICAGO, IL] – Calling the lack of credit available to small businesses in the current economy a “crisis”, U.S. Senator Dick Durbin said today that small businesses would be better able to maintain and create jobs if new lending initiatives are implemented. The news conference was held at Sittercity.com.

“Lending has been largely frozen by the credit crisis over the past 18 months,” said Durbin. “The lack of credit available to small businesses is slowing the economy’s full recovery and putting hundreds of thousands of Illinois jobs on the line. With unemployment in Illinois at 10.5 percent, we need to treat this situation as the crisis that it is.”

The role of small businesses as job creators should not be underestimated. The 30 million small businesses with less than 500 employees in this country are responsible for over half of all private sector jobs. In total, small businesses have created 14.5 million new jobs in the last 15 years, which represents nearly two-thirds of all of the new jobs created in the U.S. during that time, Durbin said.

“There are no more reliable job creators than small businesses, yet they are facing enormous obstacles when it comes to renewing loans and securing the credit needed to expand. No business, small or large, can fulfill its potential if it can’t make critical investments in the technology, machinery, and people that will pay off in the future,” Durbin said.

The Senate will soon consider several proposals to support lending by small banks, credit unions, and Community Development Financial Institutions (CDFIs) to make it easier for entrepreneurs to tap much-needed credit.

Durbin said he fully supports the proposal President Obama released earlier this week, which would do the following:

• Allow community banks who submit plans to Treasury explaining how they will increase lending to small businesses to borrow funds from the TARP program at a lower interest rate than the Wall Street banks have been able to borrow: 3% interest for five years.
• Allow certain Community Development Financial Institutions (CDFIs), many of the best of which are based here in Chicago, to borrow funds at even lower rates: 2% interest for eight years.
• Permit lenders who offer Small Business Administration (SBA) loans under the 7(a) program to lend up to $5 million per loan rather than $2 million as under current law.
• Permit Certified Development Companies—nonprofits dedicated to community economic development—who offer SBA loans under the 504 program for long-term small business expansion projects to lend up to $5.5 million per manufacturing loan rather than $4 million as under current law.

“Countless small businesses are struggling to stay afloat, while others are ready to expand if we can provide them with the seed money to get moving. We need to get these programs in place quickly. A jobless recovery is no recovery at all,” Durbin said.