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New loan programs stir discussion

July 6, 2009
In The News

Two relatively new loan programs were among the topics addressed Monday during a discussion led by U.S. Rep. Ron Kind, D-La Crosse, at UW-Eau Claire.

The Dealer Floor Plan began July 1 and is intended to finance inventory for automotive, boat, manufactured-home and other dealerships. Government-guaranteed loans, which are administered through the U.S. Small Business Administration's 7(a) program, range from $500,000 to $2 million. The program runs through Sept. 30, 2010, when an extension will be considered.

"I've been on the phone with more small businesses in west-central Wisconsin the past six months than ever before," Kind said. "Eighty percent of new jobs are through small businesses."

A panel consisting of Kind; Jeff Hudson, business and industry loan specialist for USDA Rural Development; and Cumberland native Eric Ness, director of SBA Wisconsin, also addressed a temporary America's Recovery Capital program. Introduced June 15, the program was made possible by the federal Recovery Act, which allocated $730 million in funding for the SBA. The loans of up to $35,000 are interest-free with deferred payments. They target viable businesses suffering financial hardships. The funds can help with expenses, including credit card debt.

Kind also detailed his small-business agenda:

- He said there is a need in health care to "revamp the reimbursement and incentive system." Kind has sponsored the Equity for Our Nation's Self Employed Act (H.R. 1470), which would allow the self-employed to deduct health insurance costs from payroll taxes. He also plans to reintroduce the Small Business Health Options Program Act to facilitate small-business health insurance pools with hopes of including the act in a larger health care reform package. As far as a timeline for the package, Kind said "the goal is to have some form of legislation on the floor by the end of the month."

- Kind also plans to reintroduce the S Corporation Modernization Act to help such corporations expand and grow, and the Small Businesses Add Value for Employees Act to help small businesses offer savings plans to their employees.

The panel also addressed a number of other issues:

- Ness said fees have been eliminated for the SBA's largest programs - 7(a) and 504 loans. Since mid-February, 576 loans in Wisconsin have taken advantage of the temporary measure.

- The SBA also has temporarily modified its size requirements for the 7(a) loans program and raised its guarantee to as much as 90 percent.

- The agency increased its surety bond guarantee from $2 million to $5 million in an effort to help small businesses compete for federal construction and service contracts. "We wanted our small businesses to be able to bid for these projects," Ness said.

- The Business and Industry Guaranteed Loan Program has issued $97 million in loans so far this year in the state; the most common use has been debt refinancing. Qualifying businesses must be in an area of 50,000 or fewer people.

Regarding the overall economy, Kind said progress has been made to end the current downturn.

"We will recover," he said. "Everyone wants it sooner rather than later, but it took us a long time to get here and it will take some to get out. But we're starting to see some traction; the key is job growth.

"Forty to 45 percent of (the stimulus package) is tax reform to help working families and small businesses. It takes a while for that to work through the system."