Senator Snowe's SBLF "Fix"

April 8, 2011

Authored by: Bryan Cave

Senator Olympia Snowe (R-Maine) has introduced an amendment to the enabling legislation for the Small Business Lending Fund (SBLF) that would disqualify TARP recipients from receiving SBLF investment, move the program’s small business lending benchmark from the current four quarters ending June 30, 2010 to the calendar year 2007, establish a non-discretionary 10-year repayment deadline, and sunset the entire fund in 15 years.  As drafted, however, investments made under the SBLF’s current terms would not be affected.  That may give greater import to the recently extended application deadline for C corporation banks.  The current version of the proposed amendment, SB 681, is available here.  Senator Snowe says she would like to do away with the SBLF entirely but that her proposed “fixes” are more politically realistic.

Clearly these changes, if enacted, would make a limited program even more limited.  Much of the interest among SBLF applicants to date has been from CPP/CDCI recipients looking to refinance TARP funds.  In addition, while Snowe’s press release says moving the lending benchmark date back to 2007 “would address concerns that the existing [June 30, 2010] benchmark may be too low, by historical standards, and that an adjustment could result in additional small business lending,” the SBA’s 2011 report on small business lending (which is based on Call Report data) shows that such lending was $18 billion greater in 2010 than in 2006 and $50 billion greater in 2010 than in 2005.  

We do not think this bill stands a substantial chance of passage as a standalone measure, although its attachment to the pending Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Reauthorization Act, as Snowe has also proposed, could give it a different outlook.  The vote on the current SBLF legislation was sharply divided along party lines, with only two Senate Republicans in support (Voinovich-OH and LeMeiux-FL).  We doubt Snowe will be able to gather bipartisan support in an election year for a measure that would hurt both small businesses and community banks in one fell swoop.