Dahlkemper’s Legislation for Small Businesses Health Information Technology Passes House

Small business legislation will open credit markets, support job creation

30 October 2009 -- Washington -- Original legislation from Congresswoman Kathy Dahlkemper (PA-3) to make cost-saving information technology affordable for small group and individual health care practitioners passed the House of Representatives this week. Dahlkemper’s bill, the Small Business Health Information Technology Financing Act, was incorporated into the House Committee on Small Business’ legislation, the Small Business Financing and Investment Act of 2009.

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“Administrative burdens add dramatically to the ever-rising price tag of health care, but the cost-saving information technologies which are readily available are often too expensive an investment for small group or individual health care providers. This legislation creates an affordable loan program for these providers to make the investment in health information technologies that lower the cost of health care for everyone,” said Dahlkemper, chairwoman of the Subcommittee on Regulations and Healthcare, part of the Small Business Committee.

The Small Business Health Information Technology Financing Act creates a new loan guarantee program at the Small Business Administration for the purchase of health information technology by eligible health care professionals in solo and small group practices. The loan guarantee program provides a 90 percent guarantee and loan amounts up to $350,000 for an individual practitioner and $2,000,000 for a group. Additionally, loans fees may be no more than two percent on the guaranteed part of the loan.

The Small Business Financing and Investment Act will help open tight credit markets that have shut out small business owners during this economic crisis, so they can create jobs – particularly in struggling regions and industries. By comprehensively updating the Small Business Administration’s capital access programs, the legislation is expected to support $44 billion in lending and investment for smaller firms.

“With this legislation, we are helping small firms find affordable sources of capital, one of the biggest challenges entrepreneurs face in the current economy,” said Dahlkemper. “I am proud to join my colleagues in support of a bill that helps us get Americans back to work. By giving small business owners the tools they need to weather this economic crisis, we will create and save 1.3 million American jobs and drive dollars back into our local economies.”

The bill will increase loan sizes to better meet businesses’ needs. It also includes incentives to encourage local banks to lend to small businesses and reduces bureaucratic red tape, making it easier for entrepreneurs to secure credit. The bill creates a new public/private partnership to expand investments in small business startups – an important source of job creation. It also extends critical Recovery Act provisions eliminating fees on Small Business Administration loans and guaranteeing up to 90% of 7(a) loans. To foster a diverse mix of businesses, it takes steps to promote veteran-owned, women-owned and rural small businesses.

Below please find a comprehensive summary of the Small Business Financing and Investment Act of 2009 (H.R. 3854):

Creating Jobs through Small Business Growth

* By comprehensively updating the SBA’s capital access programs, H.R. 3854 will support $44 billion in lending and investment every year, helping create or save 1.3 million jobs annually.
* H.R. 3854 establishes a new public/private partnership at the SBA that will invest in fledgling small businesses, so they can launch and create jobs. Early-stage businesses like these are some of our best job creators.
* By providing additional technical assistance and training for individuals taking out microloans, H.R. 3854 will ensure more of these new small businesses succeed. The microloan program is an important source of capital for many dislocated workers looking to launch their own business.
* For small businesses that are “major employers” in an area, the legislation will allow them to secure loans as high as $25 million. This will help small businesses that are significant contributors to local employment access larger amounts of capital.

Updating Existing SBA Lending Programs to Better Meet Businesses’ Needs

* The Small Business Financing and Investment Act reduces paperwork required for SBA loans, making it easier for both small business borrowers and lenders to participate.
* The bill helps the SBA act as a matchmaker between lenders and businesses and, in times of tight credit, allows the SBA to step in and fill in the gaps when private lenders stop lending.
* H.R. 3854 also increases loan sizes, giving businesses access to larger amounts of capital. Conventional loan size increase by 30% to $3 million; other loan programs will provide as much as $25 million for small manufacturers.
* Because businesses’ recovery is often vital for communities that are trying to come back from natural disasters, the legislation strengthens the SBA’s disaster loan program, providing a one-year deferment on SBA disaster loans. The legislation increases outreach so that, after disasters, small businesses can better take advantage of SBA’s existing disaster loan programs.
* H.R. 3854 also creates a new grant program so small firms can receive grants of $100,000 in order to help them recover from disasters.
* The legislation establishes a new training program to encourage lender participation, creating more choices for businesses seeking to acquire SBA-guaranteed loans.
* A new program at the SBA will help smaller and solo health practitioners adopt Health Information Technology, improving patient care, reducing health care costs and helping speed the adoption of electronic health records among small practitioners.

Building on the Success of the Recovery Act

* The American Recovery and Reinvestment Act, which Congress passed and President Obama signed into law in February, temporarily raised the amount that the government can guarantee on SBA-backed loans to 90%. It also eliminated fees that borrowers normally pay on SBA loans.
* These changes have already helped many small businesses. A little more than seven months since the Recovery Act’s enactment, the SBA's average weekly loan volume has jumped more than 70% when compared with the two months preceding the law’s passage. In all, the SBA has supported over $9 billion in lending since the Recovery Act’s passage.
* H.R. 3854 builds on these successes. By maintaining the higher guarantee, the bill will encourage more financial institutions to loan to small firms. The bill reauthorizes the fee waiver to make loans more affordable for small businesses.
* Under the bill, the application requirements for loans through the America’s Recovery Capital (ARC) program are reduced, so that businesses can secure these emergency, interest-free loans faster.
* H.R. 3854 also raises ARC loan sizes from $35,000 to $50,000, meaning firms can get a larger injection of short-term capital to weather the current downturn.

Delivering Startup Capital to New Ventures

* Businesses are also having difficulty raising equity capital. Beginning in the last quarter of 2008, investments in early-stage businesses plunged 26.4%.
* To address this shortage, the bill establishes a new Early-Stage Investment Program at SBA, which will pair grant money from the SBA with private venture capital in order to target investment dollars to promising small business startups.
* The legislation modernizes the SBA’s New Markets Venture Capital (NMVC) program, which steers investment dollars to businesses in low-income areas. H.R. 3854 will expand the geographic reach of the New Markets program so more businesses around the nation can utilize it.
* The bill targets NMVC resources to smaller manufacturers in low income areas.
* The legislation makes improvements to the “Renewable Energy Capital Investment” in order to increase investment in small enterprises that are researching alternative and renewable energy solutions.

Promoting Entrepreneurship for Veterans, Rural America and Women

* As many of our men and women in uniform return from the conflicts in Iraq and Afghanistan, the bill provides tools to help veterans interested in starting their own businesses.
* For veterans, the legislation offers higher guarantees and lower cost loans, so they can access more affordable capital.
* With the creation of a Rural Lender Outreach Program, this bill reduces application burdens for small business borrowers and lenders in these regions, increasing the flow of capital to businesses in rural areas.
* The Rural Lender Outreach Program also increases loan guarantees, encouraging banks to lend to rural entrepreneurs.
* The bill also makes permanent the Community Express program, which promotes lending to small businesses owned by women and economically disadvantaged individuals.

Source: Congresswoman Kathy Dahlkemper