WASHINGTON – U.S. Sen. Mark R. Warner today joined a bipartisan majority of the Senate in voting for passage of the Small Business Lending Act, legislation that includes his proposal to encourage additional credit to small businesses hurt by the credit crunch after the 2008 financial crisis. The legislation (HR 5297), which passed today 61-38, also includes several other incentives for small businesses to grow and hire new workers.

Senator Warner’s proposal creates a $1.5 billion State Small Business Credit Initiative Program to supplement state small business lending efforts, such as Virginia’s Capital Access Program (CAP). The proposal directs these federal funds to help boost the loan-loss reserve funds of participating banks, encouraging them to expand the range of small businesses to which they are willing to lend. States which have CAPs have had great success in improving small business access to credit: in North Carolina for example, funds in the amount of $4 million are expected to generate over $120 million in small business loans, which means every dollar in public funds translates into 30 dollars in lending to small businesses.

“History shows us that our small businesses play a huge role in job creation headed out of a recession – creating two-thirds of all new jobs – and I am pleased to have played a role in strengthening the existing network of small business lending programs,” Senator Warner said. “It also is important to note that the Small Business Lending Act is paid-for and will not add to the budget deficit.”

Senator Warner has worked on this small business lending proposal since last Fall, and has discussed and refined his proposal as a result of dozens of roundtable conversations with Virginia small business owners in recent months.

"This initiative by Senator Warner is a tremendous example of good government at work," says Virginia Retail Alliance President & CEO Susan Milhoan. "We made the Senator aware of the problem, he met with our members, did his due diligence and took decisive action."

Senator Warner’s proposal achieves several important goals.  First, the program increases small business lending but it is not another bank bailout: banks would only get federal funds as they make qualified CAP loans.  Second, it improves access to credit by improving the lenders’ ability to lend to businesses who otherwise might not qualify under conventional lending criteria.  Third, banks would not feel compelled to take excessive risks because they, too, will have ‘skin in the game.’

The small business tax cuts in the bill include breaks for restaurant owners and retailers who remodel their stores or build new ones. Long-term investors in some small businesses would be exempt from paying capital gains taxes. The legislation also reforms U.S. Small Business Administration programs by raising loan guarantee amounts and lowering SBA fees.