Buffalo, NY – U.S. Senator Kirsten Gillibrand stood today with community leaders at Rigidized Metals to push bipartisan legislation, the Investing in America’s Small Manufacturers Act, that would increase the availability of affordable loans for small manufacturers through the Small Business Administration’s (SBA) 7(a) and 504 loan guarantee programs. The bipartisan legislation would increase the loan guarantee limit for loans to small manufacturers, eliminate a penalty that new manufacturers are required to pay when applying for an SBA 504 loan, eliminate loan fees for loans under $350,000, and cut loan fees in half for larger loans.
“Too many small manufacturers in New York still struggle to access the capital they need from banks to expand their businesses and create more jobs in their communities,” said Senator Gillibrand. “The bipartisan Investing in America’s Small Manufacturers Act would help ensure that every hardworking small manufacturer has the capital and tools necessary to succeed. If we really want to fix our economy, then we need to start rewarding work again, and this bipartisan bill is a good place to start.”
“Small businesses provide employment to thousands of Erie County residents and are a critical part of our economic sector, and this investment in small manufacturers will make it easier for these businesses to grow and hire new employees. This Act provides greater financial resources while reducing financial burdens to small businesses, helping them to expand without onerous penalties or fees that encumber growth and stifle hiring. Making small business loans affordable incentivizes business to grow their operations and hire more staff and I thank Senator Gillibrand for promoting this legislation,” said Erie County Executive Mark C. Poloncarz.
“Like my grandfather, people with great ideas, don’t necessarily have the dough to execute their vision. Making SBA loans more accessible and less onerous, will have a large impact on small manufacturers around the country,” said Rick Smith, President and CEO, Rigidized Metals.
The Investing in America’s Small Manufacturers Act also increases opportunities for more education assistance to help small manufacturers succeed. The average approved SBA 7(a) loan in FY2017 was $407,616, and about 34% of all 7(a) loans exceeded $2 million. In FY2017, the SBA approved nearly 69,000 7(a) and 504 loans, providing more than $30 billion in lending to small businesses and supporting more than 630,000 jobs.
This bipartisan legislation is sponsored by U.S. Senator Chris Coons (D-DE) and is cosponsored by U.S. Senator Cory Gardner (R-CO). This legislation is also supported by the National Association of Manufacturers.
Specifically, the Investing in America’s Small Manufacturers Act would do the following:
- Increase the SBA 7(a) program’s maximum loan guarantee rate for manufacturers to 90%:
- The current rate is 85% for loans of $150,000 or less and 75% for loans greater than $150,000 up to the $5 million maximum amount.
- Cut loan fees for small manufacturers:
- Eliminate 7(a) guarantee fees for loans under $350,000 that go to small manufacturers. Reduce fees by 50% for loans that are more than $350,000.
- The current fee can be as high as 3.5% of the SBA guaranteed amount of the loan, depending on the size and terms of the loan.
- Eliminate the “startup penalty”:
- Eliminate the “startup penalty” that new manufacturers are required to pay when applying for an SBA 504 loan. Under current law, businesses that have been operating for less than two years are required to pay a minimum of 15% of project financing, whereas other businesses contribute at least 10%.
- Expand education assistance to small manufacturers:
- Direct the SBA to assist manufacturers in navigating the application process for the 7(a) and 504 loan programs.
- Consolidate federal assistance to small manufacturers:
- Move a duplicative manufacturing lending program from the Commerce Department to the SBA, simplifying assistance for struggling small manufacturers.