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(Washington D.C.) – Today, U.S. Senator Patty Murray (D-WA) spoke on the floor of the U.S. Senate in favor of an amendment that would create a $30 billion small business lending fund to help local community banks get the capital they need to lend money to small businesses. The amendment would also help support small business initiatives run by states across the country that are struggling due to local budget cutbacks. And it includes the Export Promotion Act which would provide support and resources to small businesses that are trying to ramp up their exports. The non-partisan Congressional Budget Office (CBO) has determined that the small business lending fund will save taxpayers $1 billion. A summary of the small business lending fund is below.  

Murray has been a long-time advocate for a $30 billion fund to help community banks lend to small businesses. Last year she introduced similar legislation, and she talked directly to Secretary Geithner and President Obama about making this happen.

The full text of Senator Murray’s speech follows:

Madam President, as all of us know, small businesses are not only at the heart of our communities they are at the heart of economic recovery.

They provide secure and stable jobs.

They drive the innovation that provides economic growth and expands opportunity for all.

They really are the foundation on which we build our economy.

But we also know that this economic downturn has hit our nation’s small businesses particularly hard.

Lines of credit have been cut off.

Businesses that were expanding and hiring suddenly slammed on the brakes.

Employees have been let go.

Inventive and original ideas have been put on hold.

And in communities throughout our country our small businesses have been left to fend for themselves.

Madam President, A large part of why this has happened can be explained by looking at the health of our community banks which provide the capital that drives business growth and job creation.

The fact is that help has come much too slow for our community banks – and because of that we have seen banks fail one after another, lending has dried up to our small businesses, and job growth suffer.

While Wall Street institutions like AIG and Goldman Sachs were deemed “too big to fail”, the collapse of our community banks has apparently been “too small to notice.”

But in communities across my state and the entire country the loss of their hometown banks has certainly been noticed. 

In my home state of Washington state, just in the past year, there have been 10 community banks that have failed.

And believe me - these communities felt the loss of these banks.

Earlier this year the FDIC closed American Marine Bank which serves a number of small communities in my state including Bainbridge Island.

It was a bank that had served small businesses and families in the community since 1948 and was the first bank that allowed residents to do their banking without having to take a ferry ride to Seattle.

Over the years American Marine provided the capital that allowed Bainbridge Island and other areas of the Olympic Peninsula to grow into self-sustaining economies.

To grow from sparse farm areas into suburbs that included thriving small businesses and family-wage jobs. 

An article that ran in the hometown Kitsap Sun newspaper after the collapse captured what the bank’s failure meant for local businesses and families.

In the article, Larry Nakata, president of a local grocery chain said that American Marine had been his bank since the day his store opened and notes the over the past 52 years, he has gotten repeated loans from American Marine to build new stores, expand, and hire new workers.

In the same article Mary Hall a local business owner talked about how a former CEO of American Marine believed in her enough to give her a loan to start up her paint company back in 1984 which still serves the community today.

And Jeff Brien a movie theatre owner talked about how American Marine provided the loans he needed to buy new land and open new theaters.

He said quote “they were there for us from the very, very beginning.”

But Madam President it’s not just that community banks are failing, it’s that they simply don’t have the capital to lend to even very successful small businesses.

This is something I have heard repeatedly in talking to small business owners from throughout my state.

In Vancouver, Washington I heard from Tiffany Turner, who with her husband, owns a growing Inn.

She told me that they have grown close to 10 percent despite the economic recession but that they have been told by their bank that - “we’re not lending in your sector.”

In Seattle, I heard from Dani Cone the owner of a local coffee company whose credit ran dry and who has been forced to borrow money from family members to keep her business afloat.

I heard from a bookstore owner who had to take out $60,000 on her PERSONAL credit cards. 

I heard from a husband and wife who opened a local restaurant about how they’ve had to close up shop for good.

I heard from people who are driven by their passions, who want to grow their business, who want to hire, but who have been stymied by the lack of credit flowing from banks.

Obviously, at a time when we are relying on small businesses to drive job growth, this is unacceptable.

Right now, we should be doing everything we can to ensure small business owners have the credit they need to grow and hire.

That’s why last year I introduced The Main Street Lending Restoration Act, which would direct 30 billion dollars in unused TARP funding to community banks - under 10 billion dollars - so they can unlock the vaults and start lending to small business again.

It’s why I spoke to Secretary Geithner and President Obama about this directly—and why I have been pushing hard to make small business lending a priority here. 

I’ve felt strongly that we must focus more on the community banks if we were really going to make progress and bring true recovery to Main Street businesses.

And it’s why I am so proud to stand here today and support this amendment that would create the Small Business Lending Fund and State Small Business Credit Initiative.

The small business lending fund takes the most powerful idea from my Main Street Lending Restoration Act.

It sets aside 30 billion dollars to help our local community banks—those under 10 billion dollars in assets – to help them get the capital they need to begin lending money to small businesses again.

It would reward the banks that are helping our small businesses grow by reducing interest rates on capital they receive under the program.

And it would help support small business initiatives run by states across the country that are struggling due to local budget cutbacks.

My home state of Washington is the most trade-dependent state in the nation—so I am very glad that this amendment also includes the Export Promotion Act—which would provide support and resources to small businesses that are trying to ramp up their exports

Small businesses are the lifeblood of our economy—and this amendment will help them get back on their feet, expand, and add jobs.

Madam President, I grew up working in a small business - my father was the manager of a five-dime in Bothell Washington.

As a kid, I did everything from sweeping the floor, to working the till, to taking out the trash.

And I remember how our little business and those around us on Main Street were the cornerstones of our community.

And how - in fact – they were the cornerstone of the local economy.

And my experience is certainly not unique.

For many decades, the defining strength of our financial system has been our small businesses and their ability to access credit at affordable rates, grow beyond their walls, and provide good paying jobs.

It’s time for us to get back to ensuring that are small businesses are the backbone of our economy.

And this amendment is a big step in that direction.

I want to thank Senator Landrieu for her outstanding leadership on this issue and I’m here today to urge my colleagues to support this amendment.

Let’s get Main Street working again.


The Small Business Lending Fund

A New Program, Separate From TARP, Providing Small Banks With Incentives to Lend to Small Businesses

  • New Small Business Lending Fund (SBLF) to Provide Needed Capital to Community and Smaller Banks

    • $30 Billion in Capital Could Provide Many Multiples of That Amount in New Lending: By providing $30 billion in capital to small banks, the Small Business Lending Fund could support several multiples of that amount in new lending.
  • Program Limited to Smaller Banks – The Banks on Main Street That Focus Their Lending On Small Businesses

    • Only the Smallest Lenders Eligible for the Small Business Lending Fund: Only lenders with less than $10 billion in assets will be eligible for the SBLF. Over 90% of eligible banks will be community banks with less than $1 billion of assets.
    • The Small Banks Eligible for The Program Are the Lenders That Focus Their Lending on Small Businesses: For example, at the average bank under $1 billion in assets, about 80 percent of commercial and industrial (C&I) lending is in loans under $1 million. 
    • While These Lenders Have Been Challenged by the Financial Crisis, They’ve Dramatically Outperformed Larger Banks in Maintaining Lending During the Crisis: For instance, commercial and industrial (C&I) and commercial real estate lending at banks with less than $1 billion in assets grew at an average annual rate of 3.5 percent for the eight quarters ending with the 4th quarter of 2009, while lending at banks with more than $10 billion in assets contracted at an average annual rate of 8.1 percent.
  • Program is Performance-Based – With Capital Structured With Incentives to Increase Small Business Lending

    • Dividend Rates Paid on SBLF Capital Decline As Banks Increase Lending: The dividend rate that banks pay on SBLF capital would decrease as they increase lending relative to a 2009 baseline level – falling to as low as 1 percent if they increase their lending more than 10 percent.
    • Banks That Do Not Increase Lending Face Higher Dividend Rate: The dividend rate would increase to 7 percent for banks that show no increase in small business lending in the first two years after receiving capital.
  • Small Business Lending Fund Established Completely Separate From TARP 

    • Program Established By New Legislation As Separate from TARP: The new program is not connected to TARP at all – it is established and funded through new legislation, with no financing from TARP.
    • Restrictions Associated With TARP Would Not Apply: The program would not include TARP restrictions that have discouraged participation from community banks, including requirements to issue warrants and limits on compensation or Net Operating Loss carrybacks. However, the program would be subject to strong oversight from the Treasury Inspector General, and requires applying institutions to submit a “small business lending plan” as well as reports on how funds have been used under the program.
  • Small Business Lending Fund  Expected to Provide Savings for the Taxpayer

    • CBO Estimates Program Would Provide Over $1 Billion in Savings to Taxpayer: With strong protections in place to ensure Treasury only lends to viable institutions and incentives to encourage timely repayment, CBO estimates that the program will provide $1 billion in savings to the taxpayer over 10 years.