Salem News: Rep. Seth Moulton’s first bill passes House of Representatives
July 14th, 2015
Washington – Last month, the House Committee on Small Business unanimously passed legislation authored by Rep. Seth Moulton (D-Salem) to increase access to capital for startups and small businesses by modernizing the Small Business Administration’s Microloan Program. The bill, the Microloan Modernization Act, was brought to the House Floor on Monday where it passed with unanimous support. This is Rep. Moulton’s first piece of legislation to pass the House of Representatives.
“Small businesses are the backbone of our nation’s economy, so I am proud that my first bill benefits entrepreneurs,” said Moulton. “Too often our small business leaders, and especially aspiring entrepreneurs, either try to self–finance new business ventures on personal credit cards or don’t take the risk at all given the fear of failure. We need to give these business leaders the tools and resources they need to start new business and grow existing ones. Expanding access to capital is a critical part of ensuring our small businesses have the opportunity to thrive.”
The Microloan Modernization Act aims to increase loans available to small businesses and provide greater flexibility for borrowers. According to a report by the House Small Business Committee, last year, the SBA Microloan Program supported nearly 16,000 jobs. Further, the SBA has said that that participating lenders supported more than 3,900 small businesses in 2014 with $55.5 million in microloans. In the Sixth District, numerous small businesses have benefited from the program including Prism Products and Rite Spice Caribbean.
Prism Products, an industrial lubricant distributor, last year received a microlending loan from the Economic Development & Industrial Corporation to purchase extra inventory, which in turn is helping to bring in twice times the revenue and support daily operations. Owner Lisa Fitzpatrick was then able to hire a sales professional with 15 years of experience. “It’s hard for a small business to operate with very little cash flow,” said Fitzpatrick. “The loan ultimately made it easier for me to hire more help and give my employees more hours. It’s been a tremendous help.”
The Microloan Modernization Act expands access to capital and offers greater flexibility to borrowers. Specifically the bill:
* Creates a waiver for the “25/75 rule,” an outdated formula that prevents microloan intermediaries like the Merrimack Valley Small Business Center from adequately addressing the needs of each borrower;
* Increases the aggregate loan limit cap to $6 million to better serve small business borrowers in high-demand areas;
* Extends the repayment period to 10 years for loans greater than $10,000;
* Authorizes the SBA to extend lines of credit for small businesses.
