Jun 18 2014
Washington, D.C. – U.S. Senator Deb Fischer (R-Neb.), member of the Small Business Committee, today announced she has introduced legislation to improve microfinance services aimed at helping entrepreneurs with limited resources start their own businesses. The Access to Capital, Access to Opportunity Act (Access Act) would strengthen the Small Business Administration’s (SBA) microloan program, which offers affordable loans to aspiring small business owners for working capital, supplies, material, and inventory. Access to capital is a steep, sometimes insurmountable, challenge for startups and small businesses, which are often denied loans by larger investors not interested in expending the necessary time or resources.
The Access Act would (1) increase the current loan limit to $100,000, providing enhanced access to working capital to begin a business in a challenging economic climate; (2) codify reporting requirements among loan recipients, intermediary loan providers, and the SBA to ensure accountability; and (3) encourage the SBA to increase awareness among low-income earners about the availability of microfinance services.
Senator Fischer released the following statement:
“Restricted access to capital is a significant obstacle holding back too many ambitious entrepreneurs from building and growing successful small businesses. The Access Act improves existing microfinance services to address this challenge and foster greater opportunity for men and women with limited resources to pursue the American dream. More access to capital means more access to opportunity for families to start their own businesses, climb out of poverty, strengthen communities, and create jobs.”
The current SBA program provides direct loans to qualified non-profit intermediary microloan lenders (intermediaries), which grant microloans – currently capped at $50,000 – to eligible applicants. This arbitrary cap limits the amount of working capital available for entrepreneurs, many of whom struggle to survive their first year. Most microloan recipients do not qualify for conventional loans or larger SBA loans. Applicants may be required to fulfill business training to help launch or expand a business. There are 178 intermediaries in 48 states, including four in the state of Nebraska. The SBA’s loss rate for intermediary repayment is less than three percent annually.
Full text of the legislation is available online HERE.