WASHINGTON, D.C. – Today, Congressman Dan Meuser (R-PA), Chairman of the Small Business Subcommittee on Economic Growth, Tax, and Capital Access, held a hearing titled “Enabling Success: Examining the Competitive Landscape for Small Businesses.” Subcommittee Chairman Meuser issued the following statement after the hearing:

“Small businesses are already navigating a maze of challenges – including inflation, regulatory costs, and difficulty accessing capital,” said Subcommittee Chairman Meuser. “The last thing they need is additional roadblocks, particularly from institutions like the Federal Reserve, that limit their access to capital and ability to succeed. Take, for instance, the issue of interest deductibility and the Basel III Endgame proposal. If we allow these issues to go unaddressed, domestic investment, global competitiveness, and small businesses’ access to capital could be significantly impacted. Our small businesses are fighting to thrive, and we cannot allow misguided proposals to tie their hands behind their backs.” 

---

Below are some key excerpts from today’s hearing:

Chairman Meuser (R-PA): “So Mr. Chung, what those lack of certainty, the challenges, the interest deductibility, access to capital. Expand a little bit further. What are the things that are concern to you that can be the difference between your growth, more employment being built to last and survival?” Mr. Chung: “Thank you for the question, Chairman. I think you guys hit it on the head. The first thing is predictability. We're in an ever-changing environment where when we go to work with the bank, when they're underwriting any requests for access to capital, the unpredictability and predictability causes it or makes it difficult for the bank to consistently underwrite our business. In terms of specifically what we were discussing today in regards to the deductibility with interest rates. It would further reduce cash flow, for any type of cash flow analysis for underwriting. Another issue that came to mind as one of my fellow witnesses was discussing some of the programs that were rolled out during COVID is also the EIDL loans. A lot of these small businesses have EIDL loans sitting on their balance sheets as well. These EIDL loans are taken into consideration by the banks and are becoming difficult for these businesses, one to pay off and also to reach or to access additional capital due to the balance sheets holding these EIDL loans.”

Rep. Williams (R-TX): “Small businesses rely heavily on loans and credit lines from the banks of all sizes in order to sustain and expand their operations. Implementing additional regulatory capital requirements will slow economic growth and hinder financial institutions’ ability to lend and quite frankly, make it easier maybe on banks not to make loans as to make loans. So, Ms. Wade, how will limiting access to capital affect the small business community?” Ms. Wade: “Certainly, so small businesses rely on the flexibility a one size fits all regulation or regulatory environment also includes. The banking industry will certainly impact small firms’ ability to access credit. One of the areas of concern is also the added paperwork burden and the process by which they are applying for credit, and that the process is being lengthened. The amount of paperwork being required is increasing, and all of this affects small business owners’ ability to access credit.”

Rep. Alford (R-MO): “Ms. Wade, thank you for being here today. You note in your testimony that H.R. 4721, the Main Street Tax Certainty Act, will provide relief and tax certainty to small businesses. This bill would make permanent a provision in the TCJA that helps small businesses. I'm a proud co-sponsor of this bill. You also mentioned that regulatory burdens and red tape from the Biden administration and using the SBA offices of advocacy. You touch on that. Can you expand on that? Just how important is H.R. 4721?” Ms. Wade: “It's incredibly important for the ability of small business owners to continue to operate and grow their business. They're under some really challenging headwinds right now with inflation and worker shortage and all of that and having some certainty that their taxes won't increase in a couple of years will go a long way to allow them the room to grow and operate their business. The Tax Cut and Jobs Act was a huge help for small business owners to retain more of their profits. To then use those profits to invest in their business. And that was where we saw, you know, some huge optimism that we track in our monthly small business Economic Trends survey. And small business owners, you know, felt confident going forward that they would be able to maintain business operations and even grow their business if they found the opportunity. But those expirations of those key provisions, especially the 20 percent small business deduction that they're able to benefit from now, will be a huge tax increase for them, if it does expire and will impair their ability to reinvest in their business and grow.”

###