Tuesday, February 5, 2008

Bush Budget a Bust for Small Business

So says the junior senator from my home state - Massachusetts.

Time to get out there and fight for funding, small business owners.

    WASHINGTON, Feb. 4 /PRNewswire-USNewswire/ -- Today Sen. John Kerry
(D-Mass.) said the President's proposed budget cuts critical small business
programs and falls short of repairing the deep cuts to the agency over the
last seven years. Excluding disaster loan funding, the proposed budget for
next year represents a 28 percent cut for the Small Business Administration
(SBA) since President Bush took over in 2001 -- the largest cut of all the
federal agencies -- and a three percent cut from 2008 appropriations. The
President's request of $657 million, including disaster loan program funds,
for the SBA is only .02 percent of the entire $3.1 trillion budget.

"Unfortunately, this budget is more of the same from the Bush
Administration for America's 27 million small businesses. The Bush budget
fails to provide the critical investment to finance start ups and grow
existing businesses. Last year, nearly 900,000 jobs were created or
retained due to government-backed loans and venture capital deals to small
businesses. But we're already seeing these loans on the decline this year
as a result of the mortgage crisis so we need to do everything we can to
boost these programs. This is not the time to be making cuts," said Kerry,
Chairman of the Committee on Small Business and Entrepreneurship.

"The significant proposed cuts to business counseling programs will
have a detrimental impact on our ability to help small businesses succeed.
I will work with my colleagues in a bipartisan way to reverse the severe
Bush Administration cuts as the Democratic-led Congress did last year when
we restored $40 million to core small business programs," Kerry said.

Once again, the Bush Administration proposes no funding for small
business loan programs and deeply cuts counseling and outreach programs
like Small Business Development Centers, Women's Business Centers, and
technical assistance programs.

Specifically, the proposed 2009 budget:

-- Lacks funding for loans and venture capital programs. The budget yet
again provides no funding for the SBA's largest loan programs -- 7(a) and
504 -- and provides no increase in the authority to back new loans. The
President has recommended a program level for 7(a) loans of $17.5 billion
for 7(a) loans and $7.5 billion for the 504 program--the same as his last
two budget proposals. There is no money for the SBIC debenture program, and
the President has recommended the same program level of $3 billion for the
last six years. Last year, nearly 100,000 businesses received 7(a) loans, a
$14 billion investment in the economy that created or retained over 624,000
jobs. Nearly 200,000 jobs were created or retained from the 504 loan
program, which lent nearly 11,000 small businesses over $6 billion in
loans. The SBIC program helped create or retain almost 63,000 jobs in 2007.

-- Eliminates all funding for the Microloan Program and Microloan
Technical Assistance. This year's proposed budget increases the program
level for the microloan program from $21 million to $25 million but doesn't
fund it. It continues shifting the cost to the lenders. This is the second
year in the row the president has made this proposal; for the previous
three years in a row he sought to eliminate the SBA's microloan program.
Microloans proportionately help more women and minorities than other
programs. The proposal also eliminates the counseling assistance program,
Microloan Technical Assistance, which is essential to help
microentrepreneurs succeed and repay their loans. Last year 2,437 small
businesses received more than $31 million in microloans nationwide.

-- Eliminates low-income capital program. The President requested no
new funding for the New Markets Venture Capital Program.

-- Cuts funding for key counseling programs. The President's budget
proposal makes significant cuts to grants for Small Business Development
Centers and Women's Business Centers, reducing their proposed budgets by
$10 million and more than $1 million respectively. Over the last seven
years, SBDCs and WBCs have essentially been flat-funded, which equals real
cuts for these centers due to their funding level not keeping up with
inflation. In addition, with the elimination of the Microloan Technical
Assistance program, the President proposes SBDCs and WBCs would pick up the
slack despite already reduced funding. Last year, SBDCs assisted 600,665
businesses and WBCs assisted 147,000 businesses. The Program for Investment
in Micro-entrepreneurs which provides counseling to low-income
entrepreneurs has also been eliminated.

-- Provides no new funding for Procurement Center Representatives. The
proposed budget provides no new funding to hire additional PCRs. Currently
there are about 57 PCRs -- although only around 30 have full-time PCR
duties -- to monitor contract bundling and break out contracts for small
firms. This falls far short of the 100 PCRs Congress has been calling for
to oversee nearly $400 billion in federal contracts.

-- Cuts funding for critical assistance programs and eliminates
line-item transparency. The President continues to propose cuts to funding
for the 7(j), HUBZone and Native American Outreach programs as well as roll
the funding into the overall agency operating budget. This reduces
transparency and creates uncertainty as to how much funding the programs
will receive.

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