U.S. Chamber Calls For Action On Trade Agreements

February 22, 2011

Phoenix Business Journal

Kent Hoover

WASHINGTON - Lending to small businesses declined by 6.2 percent last year, to $652 billion, according to a new report by the U.S. Small Business Administration’s Office of Advocacy.

Still, that’s smaller than the decline in lending to large businesses: 8.9 percent.

The report used call report data to compare business loans held by banks, thrifts and credit unions in June 2010 with the amount held in June 2009. The biggest decline in small-business lending over this period was in commercial real estate loans. Commercial and industrial loans to small businesses were down by only 4.1 percent, and actually increased by 2 percent for loans of $100,000 or less.

Nearly 40 percent of small-business loans outstanding in June 2010 were held by the 34 banks that have more than $50 billion in assets.

The report also lists the top small-business lenders, both nationally and state by state. Among large financial institutions, the top small-business lenders were American Express, Ally Financial, Wintrust Financial, Capital One and BB&T. For business loans in the $100,000 to $1 million range, the top lenders were Synovus Financial, First Citizens BancShares, Zions Bancorp., BB&T and Fulton Financial.

The state-by-state lists are particularly valuable, because they “can help both small-business borrowers and lending institutions see where small firms are beginning to find the capital they need,” said Winslow Sargeant, the Office of Advocacy’s chief counsel.

For more: www.sba.gov/advo.

SBA begins making smaller loans through new program
The SBA’s new streamlined loan program for businesses in underserved markets kicked off Feb. 15.

That’s the day the SBA’s preferred lenders could begin making loans through the Small Loan Advantage program, which offers a streamlined application process for loans of up to $250,000. The SBA will guarantee 85 percent of the loan amount for loans less than $150,000 and 75 percent of larger loans.

The SBA also began accepting applications from community-based financial institutions that want to make government-guaranteed loans through the Community Advantage program. This program combines a streamlined process for lower-dollar loans with technical assistance to borrowers in low-income areas.

SBA Administrator Karen Mills said businesses in underserved communities “have been among the hardest hit by the recent economic downturn.” The two new loan programs “can provide critical support to help these businesses and entrepreneurs get much-needed financing to start and grow, which will translate into more jobs in these communities.”

For more: www.sba.gov.

SBA adopts new income limits, other rules for 8(a) contractors

The SBA revised its rules for participation in the 8(a) program, which provides about $19 billion in federal contracts every year to minority-owned businesses.

Small businesses owned by U.S. citizens who are socially or economically disadvantaged are eligible for the program’s contracting preferences. Under the new rules, individuals must have adjusted gross income of $250,000 or less to qualify as disadvantaged, unless they can show why an exception should be made. Once in the program, the income threshold for 8(a) owners rises to $350,000.

Individuals with assets of more than $4 million (including their homes and businesses) will be presumed ineligible. Once in the program, assets must continue to total less than $6 million to retain eligibility.

The new rule also included changes designed to ensure the program achieves its desired purpose: helping disadvantaged businesses grow.

For example, the new rule requires that 8(a) companies perform at least 40 percent of the work when they receive an 8(a) contract in a joint venture with a larger business.

It also addresses concerns about Alaska native corporations, which have dominated 8(a) contracting in recent years because they are exempt from size limits on sole-source contracting awards. Critics contend many ANCs have helped the white executives who run them more than they’ve helped Alaskan natives. In response to this concern, the new 8(a) rules require ANCs to report the benefits their tribal members have received as a result of their 8(a) contracts.

“The SBA struck a meaningful balance by protecting government and taxpayer interests with these reforms while continuing to provide economic opportunities for disadvantaged businesses,” said Rex Rock Sr., president and CEO of the Arctic Slope Regional Corp., an ANC based in Anchorage.

For more: www.sba.gov.

Congress to get Korean trade deal, but business also wants two others

Business groups are pleased that President Barack Obama finally will send Congress a free trade agreement with South Korea, but they also want action on long-stalled deals with Panama and Colombia.

U.S. Trade Representative Ron Kirk told a House committee that the Obama administration will send the South Korea deal to Congress for a vote “in the next few weeks.” This could lead to $10 billion more in U.S. exports to South Korea every year and support more than 70,000 American jobs, Kirk said.

Serious issues remain, however, on trade deals with Panama and Colombia, Kirk said. He promised to “immediately intensify our engagement” to resolve these issues “so that Congress can consider them this year.”

Labor rights in those countries appear to be the biggest issue standing in the way of final deals.

“We will not sign agreements for agreements’ sake,” said Kirk, a former mayor of Dallas. “They must be enforceable and of the highest standard, in the interests of our workers, farmers and businesses.”

President George W. Bush negotiated trade deals with those two countries and South Korea in 2007, but the House showed little interest in ratifying them when Democrats controlled Congress.

“I’ve got a different agenda,” said U.S. Rep. Dave Camp, R-Mich., the new chairman of the House Ways and Means Committee. “It includes opening markets around the globe so that American businesses, farmers and ranchers can sell their products and grow their operations -- and jobs -- here at home.”

Camp praised Kirk for his work in finalizing the trade deal with South Korea -- “but that was South Korea, and unfortunately it seems we need to keep reminding the administration that we have three pending trade agreements, not just one,” he said.

The U.S. Chamber of Commerce is frustrated as well.

“Four years of delay on these trade agreements with Colombia and Panama have cost thousands of American jobs and battered U.S. market share in these countries,” said Tom Donohue, the chamber’s president and CEO. “The time for talk is over. To create American jobs, we need to see action.”

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