Senator Olympia Snowe introduced legislation that authorizes the Small Business Administration (SBA) to establish a three-year pilot programme that will encourage lenders to securitise pools of small business loans.
"This bill seeks to increase capital available to small businesses, without creating additional risk for the government, at a time when we need to support the recovery of the small business community the most," says Snowe, who chairs the Senate Small Business and Entrepreneurship Committee.
The ability to sell securities based on returns from the loans would encourage banks to make more loans to small businesses and entice more lenders to enter the small business market, Snowe says.
No additional appropriations are needed because fees charged to the financial firms that administer the loan pools would cover the SBA's partial guarantees on the pools.
