For Immediate Release                                                   Contact: Amanda Molk, 202-225-5256
May 22, 2003

Napolitano Votes to Increase Capital for Small Business

In a move that will potentially open millions of dollars in additional small business financing opportunities, Congresswoman Grace Napolitano (D-CA38) joined her Small Business Committee colleagues in a unanimous vote for H.R. 923, the Premier Certified Lenders Program (PCLP) Improvement Act.    “Accessing capital continues to be a major problem,” said Napolitano.  “With the local, state and national economy continuing to struggle, making capital more available to small businesses, the engine of our economy, must be a top priority,” she stated.

The legislation amends the Small Business Administration (SBA) 504 Certified Development Center (CDC) Loan Program, which provides capital for job creation and business expansion.  “The SBA’s 504 Loan Program is one of the key avenues for small businesses to receive needed capital.  It is critical that we provide the legislative framework to allow this program to be as effective as possible,” noted the Congresswoman.

While the 504 Loan Program has been successful in supplying capital to small businesses, the SBA’s slow turn around for loan approval was a serious concern.   The Premier Certified Lenders Program (PCLP) was established to address this issue. The approximately 30 PCLPs nationwide have the ability to certify their loans, taking SBA out of the approval process and ensuring that small businesses start receiving financing as soon as possible. 

Within the framework of the PCLP are antiquated laws that require lenders to maintain loan loss reserves in excess of what is needed for protection from possible losses, such as loan defaults. Currently, these lenders are not allowed to withdraw from the loan loss reserve until the loan is paid in full, creating larger reserves than necessary.  These reserves can add up to millions of unused dollars, limiting the program’s lending potential. 

“The legislation we passed in Committee today will provide PCLP Certified Development Centers with flexibility in determining their loan loss reserve, while employing safeguards that will protect the government’s interests. As a result many 504-Loan Program lenders will be able to make more loans to small businesses, which is our ultimate goal,” explained Napolitano.

“This bill has strong bipartisan support.  I hope to see it become law soon,” Napolitano concluded.

Representative Grace F. Napolitano, 38th District of California
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