Wednesday, December 30, 2009

Healthcare Issues

After a tense meeting December 14, it appears the Dems will drop the Medicare buy in [ 55 to 64 year olds] from the Senate health bill. As you will recall they previously dropped the public plan. This according to the Washington Post and NY Times. If this true it would appear to me that the Senate will have the 60 votes they need to move the bill forward to conference committee. What I don’t know is if the abortion issue is resolved in the Senate and if there will be any resistance from the liberals in the Senate for dropping the public plan and the Medicare buy in.

We continue to push hard for the passage of 2869. See below outline of the bill. I confirmed yesterday that Senator Boxer will become a cosponsor on the bill. SB California will be sending a letter of support on this and will be joined by a coalition of about 10 California small business associations. We are also working with NADCO and the National Association of Government Guaranteed Lenders.

Last night Congressman Abercromie from Hawaii introduced in the House the House version of S 2869 - H.R. 4302.

December 14, 2009
Legislative Update on New Senate Bill S. 2869
Late last week, the leadership of the Senate Small Business Committee, Senator Mary Landrieu (D-La), Chairperson, and Senator Olympia Snowe (R-Me), Ranking Member, introduced the “Small Business Job Creation and Access to Capital Act of 2009”. Committee mark-up for this bill, S. 2869, is scheduled for December 17th. I am writing to ask that you immediately contact your Senate offices asking your Senators to cosponsor this bill. Time is critical and you should make this effort before the close of business on this Wednesday, November 23rd.

As of now, the following Senators have already signed on as co-sponsors:
Senator Byron Dorgan (D-ND)
Senator John Kerry (D-Ma)
Senator Joe Lieberman (I-Ct)
Senator Jeanne Shaheen (D-NH)

Our thanks to these Senators and the Committee leadership for introducing and co-sponsoring this legislation so critical to helping small business borrowers get back to a growth mode by enabling us to provide more long term capital to them. Additionally, our thanks go out to the CDCs that have worked so well in educating both Senators and staff about 504 and its benefits in their states. These efforts will certainly pay off for your borrowers if this bill moves quickly.

The bill addresses several requests made recently by President Obama (including authorizing the extension of the 504 stimulus provisions through calendar 2010) to substantially expand access to capital for small businesses. NADCO Leadership strongly supports the bill.

To further explain, as many of you know, funds for offset of the bank and CDC processing fees that were provided by the February stimulus bill have been exhausted. This bill authorizes extension of these fee offsets if Congress APPROPRIATES funds for the programs. NADCO continues to support all efforts to get Congress to provide new funds for these fees, but this is still being discussed by the key Congressional leadership and is not assured at this time. We encourage you to discuss the need for additional funding to offset these fees with your Members of Congress, and ask them to request this from the Appropriations Committees.

The many benefits for the loan programs and for small businesses of S. 2869 include:


l. Loan size increases - - - permanent 504 loan maximum increases were provided as follows:

Regular and public policy goal loans would be increased to $5 million;

Small manufacturer loans would be increased to $5.5 million; and

Energy loans would be increased to $5.5 million.

2. Fee reductions - - - both 504 and 7(a) fee reductions would be authorized through December 31, 2010 (current authorizations are sunset September 30, 2010).

3. Alternative size standard - - - an interim size standard of $15 million net worth and $5 million net income would be provided for both 504 and 7(a) loan applicants until such time as SBA establishes a size standard for both programs based on maximum tangible net worth and average net income.

4. Temporary refinancing - - - authorizes additional financing under 504 for debt refinancing and payment of business expenses. It would be sunset two years after date of enactment and differs from the permanent debt refinancing program created by the stimulus bill this year:

Program cap - - - although part of the regular 504 program and subject to use of its annual program level authorization, it would be limited to a maximum aggregate approval level of $4 billion per year.

Fees - - - in addition to the regular fees, SBA would impose an additional fee if it determines there will be additional cost attributable to refinancing.

Use of proceeds for debt refinancing - - - requires that the debt - - -

1. has been incurred to acquire a fixed asset that is eligible for 504 financing not less than two years before the loan refinancing application
2. is a commercial loan and not subject to a Federal guarantee.

As with the permanent debt refinancing program,

1. the new debt must be collateralized by the fixed assets acquired
2. the borrower must have been current on all payments for at least the past year
3. the existing debt must have been incurred for the benefit of the borrower.

Alternative to jobs test - - - in lieu of the otherwise required jobs test, the eligibility of the borrower may be based on the current jobs in the business times $65,000, with pro-rata credit for part-time jobs.

Loan to value ratio - - - the loan must have a loan to value ratio not exceeding 80%; however, if the collateral appraisal does not satisfy this requirement, the borrower may inject additional cash or other collateral to correct the deficiency.

Use of proceeds for business expenses - - - if there will be debt refinancing, the proceeds may also be used solely for the payment of business expenses, which must be specifically described and the amount itemized.

Additional limitation - - - no part of the loan may be used for non-business purposes.

Use of PCLP - - - the loan may not be approved under PCLP authority.

Borrower loan size - - - the maximum amount of a micro-loan is increased to $50,000.

Intermediary loan size - - - the maximum loan to an intermediary is increased to $5 million.


1. Loan size increase - - - the maximum amount of a 7(a) loan would be increased to $5 million gross; the maximum net guarantee would be increased to $4.5 million until 1-1-2011 when it would be reduced to $3.75 million (in accord with the guarantee %).

2. Loan guarantee percentage - - - the authorization for a maximum loan guarantee would be increased to 90% on loans of all sizes until 1-1-2011 and which time it would revert to the customary 90% on loans up to $150,000 and 75% on larger loans.

(Chris Crawford President/CEO , 703-748-2575,

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

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