WASHINGTON, D.C. (March 5, 2021) – U.S. Representative Tim Burchett (TN-02) has reintroduced H.R. 1487, the Microloan Transparency and Accountability Act. Reps. Andy Kim (NJ-03), Scott Fitzgerald (WI-05) and Marie Newman (IL-03) signed onto this legislation as original cosponsors. This bipartisan legislation passed the House of Representatives unanimously during the 116th Congress.
“I’m excited to once again lead this effort that will make a difference for East Tennessee’s mom-and-pop shops,” Rep. Burchett said. “As a former small business owner, I know accessible financial resources are important for growth, innovation and success. Under this legislation, America’s entrepreneurs – regardless of background or location – will have easier access to capital that helps them reach their goals.”
“We need to do everything we can to help our small businesses in this critical time,” Rep. Kim said. “We’ve seen too many times during this crisis small businesses that have missed out because the system simply doesn’t reach them. This bill will make a big difference for small businesses across our country, and I’m proud to work with this bipartisan team to move this legislation forward.”
“For the last 30 years, the SBA’s Microloan Program has provided small business owners with loans they ordinarily wouldn’t have access to in larger capital markets. Despite the growth we’ve seen with the Microloan Program, the SBA produces minimal statistics that are needed to evaluate the program,” Rep. Fitzgerald said. “This commonsense legislation would require the SBA to produce an annual report detailing additional information about microloans that have defaulted and the number of loans provided to rural areas. We owe it to Americans to conduct basic oversight to protect their taxpayer dollars.”
“Small businesses are the lifeblood of our communities and the engine to our local economies. Now more than ever, we have a fundamental obligation to ensure our small businesses have equitable access to receiving microloans from the federal government,” Rep. Newman said. “As a former small business owner, I know first-hand that loan opportunities can make a life-changing difference for a business. It’s the difference between keeping your door open for business or not. That's why I'm especially proud to co-lead this legislation, which is specifically designed to increase access to financial support for the smallest of our small businesses so they can not only survive this pandemic but bring back their workers and help reignite our economy.”
The Small Business Administration’s (SBA) Microloan Program currently experiences low participation in rural areas. Rep. Burchett’s legislation addresses this issue by offering a 5% technical assistance grant to SBA microloan intermediaries when these institutions work with rural small businesses. Microloan intermediaries must make 25% of their loans to rural small businesses to be eligible for the technical assistance grant.
This bill also aims to improve transparency within the Microloan Program, requiring the SBA to provide Congress with a Portfolio Risk Analysis of microloans on an annual basis. Updating Congress with this information will help prevent fraud and government waste within the Microloan Program. It will also ensure SBA resources are directed towards rural communities, not just metropolitan areas.