Remarks in a roundtable discussion on small business in Merrimack, New Hampshire

Weekly Compilation of Presidential Documents, Feb 12, 1996

[Tony Halvatzes, president, New Hampshire Hydraulics welcomed the President and briefly described how the Small Business Administration had helped him expand his business.]

The President. Tony, I'd say you've seeded this crowd pretty well. That's what all of us politicians try to do, we try to go to crowds where the people are going to cheer for us. You did a good job.

Mr. McGowan, do you want to say anything?

[Patrick McGowan, Regional Administrator, Small Business Administration, welcomed the President, discussed making the SBA program more user friendly, and introduced the first participant.]

The President. Tell all the people here about your business, first.

[The participant described her business and how the Government shutdown had affected her SBA application. Another participant indicated that small businesses are often financially unable to provide all they would like for their employees and said a national health care bill would help small business. A third participant said that he had to turn some business away because of the limited size of SBA loan guarantees for small businesses.]

The President. So, it would help you if the SBA could guarantee a larger size loan?

[The participant responded that the current SBA limit is $750,000 which is aimed at a very small business but that when a small business begins to grow, the owner is left wondering whether they will receive help.]

The President. And what would be the size loan that you think that we ought to look at? Let me back and say - you know how the SBA program works, the SBA loan guarantee program works, and one of the things that I'm proudest of about our administration and all this work we've done to try to give the American people a Government that costs less and does more is that we have reduced the budget of SBA by about 40 percent and we've doubled the loan volume.

But one of the things that we were compelled to do, given the budgetary situation we were in, is to go from a maximum loan of - I think it used to be $1 million down to three-quarters of a million. But what I gather you're saying is that you need a bigger one even than that. You think there should be some sort of a program for non-bankable loans for a modest-size business that goes up to, what, $2 million?

[The participant said that $2 million would serve to get small businesses over the hurdle to the point where they would be bankable without an SBA guarantee. Mr. McGowan indicated that SBA limitations were partially a result of success, because SBA had gone from 26,000 loans to 56,000.]

The President. But I think, you know - again, this is the sort of thing that I hope will come out of this budget debate. That is, it seems to me that you can conclusively demonstrate that the SBA has done what the taxpayers wanted. We've cut the cost of operating the program. We have now more than doubled the loan volume, you just heard him say that. And the only reason we had to change the ceiling is because we wanted to accommodate as many people as possible. So, it may be possible now to go back and say we ought to have a bigger loan volume ceiling because our administrative costs are very, very low. And we have - the form used to be an inch thick and it used to take 5 or 6 weeks to approve. And now with the Lowdoc program it's just one page, either side, and we try to give just a couple days' turnaround, and it's been very well received.

[The participant noted that, though the SBA fees had increased, the higher fees are not a problem as long as the program continues.]

The President. By increasing the fees, what that's enabled us to do is to run the program and continue to maintain a high volume of loans while we're reducing the deficit. And by charging - getting a little more of the fees we can still fill that gap between the banks, you know, where you can't get the bank loans, and still the borrowers come out ahead in it, financially.

So we went out and sampled, sort of, the small business community and asked them, how about this, because this way we can keep volume up even as we're bringing the budget deficit down. And I'm glad you said that, because you're the first person I've had a chance to ask since we did it. I didn't know if I'd be dodging hydraulic equipment or not. [Laughter] Thank you.

[A participant said that she wished that the SBA could assist small businesses when they were just starting up and when capital is hard to find.]

The President. If I could just interject here. The general title of what she's talking about, getting very small loans to start businesses is microenterprise loans. For many years our Government - which believe it or not only spends one percent of your tax dollars on foreign aid, contrary to popular belief, we have the smallest foreign aid program as a percentage of our budget of any advanced Government in the world, but we have gotten a lot out of it - because, among other things, there's a country in Central America where, a few years ago, in cooperation with some American religious groups that were operating development programs, we put $1 million into a small loan program. The average loan program was $300.