Opening Statement for Hearing on
Increasing Access to Capital for Small Business
Sam Graves
Ranking Member
Committee on Small Business
United States House of Representatives
Washington, DC 
October 14, 2009

I would like to thank the Chairwoman for holding this important hearing to consider legislative changes in the Small Business Administration’s capital access programs.  As I have mentioned before, access to credit and capital is critical to small businesses and the American economy. 

During the past few years we have seen the capital and credit markets fluctuate wildly.  Those changes are evident in the SBA’s own lending statistics.  In fiscal year 2007, the agency made approximately 90,000 loans worth about $14 billion through its 7(a) lending program.  In fiscal year 2009, those figures are 44,000 and $9 billion.  Some might say that credit was too available in 2006 and 2007.  Today, the pendulum has swung completely in the opposite direction with credit and capital too unavailable.  Clearly, the economy must find an appropriate middle ground. 

In an effort to navigate an appropriate middle course, the SBA capital access programs can play a vital role.  Those programs can fill gaps where conventional commercial credit and capital markets are not supplying funds to small businesses.  Of course, those programs do no good if there are significant barriers to their utilization by lenders, investors, and small business owners. 

The bills being discussed today are designed to reduce impediments to their use by lenders, venture capitalists, and small businesses.  This is a good start and I hope to hear from our witnesses what additional changes are needed to unfreeze the capital and credit markets for small business owners. 

While I am generally supportive of the bills before us today, I still have some concerns about some of the legislative proposals.  I recognize that additional expenditures may be necessary to fix programs that are currently not functioning but given the current budgetary constraints, the costs of some of the initiatives remain troubling.  Furthermore, there may be some difficulties with implementation of some of the programs.  I look forward to working with the Chairwoman and the rest of the Committee to resolve these issues in a bipartisan manner. 

It is important to recognize that the legislative actions we take in this Committee are only a component of a broader strategy needed to revitalize the small business economy.  With 25 million small businesses in this country, improving the capital access program of the SBA will not cure the credit and capital access ills through which the economy is suffering.  We must recognize that overly restrictive regulatory policies must be corrected in order to swing the pendulum back to an appropriate middle ground for the country’s capital and credit markets. 

Congress also must not adopt policies that sap confidence of small business owners to invest in the growth of their enterprises.  Imposition of additional costs, whether it is through cap and trade  legislation or increased taxes to reform health care, will reduce confidence in small businesses to take the economic risks needed to grow their enterprises.  If Congress takes an approach that improves access to capital in SBA programs on one hand, and then takes away through increasing operating costs of small businesses on the other, Congress will not have accomplished anything.    

Again, I would like to thank the Chairwoman for holding this hearing, the witnesses for taking time out of their busy schedules to provide us with valuable input, and yield back the balance of my time.