Sen. Ben Cardin (D-MD)

SBA Enhancements Expire—Congress Adjourns Until After the Midterm Elections

With the midterm elections quickly approaching, the 111th Congress adjourned as lawmakers headed back to their home states to face voters in what may be the most challenging campaign in some of their political careers. Congress did, however, leave behind a number of unresolved issues, which will have to be addressed during a lame duck session, such as all spending bills for the fiscal year beginning October 1 and decisions on extending the tax cuts of 2001 and 2003, passed under President George W. Bush, which expire on December 31. Here is a brief summary of what Congress did or didn’t accomplish since the summer recess and what party may control the U.S. Congress during the 112th session.

On September 27, the President signed the Small Business Jobs Credit Act designed to increase lending for small businesses, which is administered by the U.S. Small Business Administration (SBA). The key components contained in this package include reforms that increase loan limits from $2 million to $5 million for SBA 7(a) loans while eliminating fees charged to banks and increasing government guarantees on loans made through the SBA from 75% to 90%. Does this sound familiar? It should, because NASBP has long advocated for similar reforms for the SBA Surety Bond Guarantee Program.

Meanwhile, the enhancements made to the SBA Surety Bond Guarantee Program, such as increasing the contract size to $5 million, that were included in the American Recovery and Reinvestment Act (ARRA) of 2009 expired on September 30. Senator Benjamin Cardin’s (D-MD) staff asked NASBP and Surety & Fidelity Association of America to assist in gathering support for an amendment to make these changes permanent that Senator Cardin was prepared to offer. Unfortunately, politics overcame good policy and the Senator’s amendment was not adopted.

In the mean time, Senator Cardin will continue to seek opportunities to make permanent the changes to the SBA Surety Bond Guarantee Program, for example by including language in a draft tax extender package proposed by Senator Max Baucus (D-MT), Chairman of the Senate Finance Committee. NASBP will continue to assist Senator Cardin’s staff to help make these changes permanent. According to a study released by the SBA, the initial target for the SBA Surety Bond Guarantee Program was to issue $147 million in bonds to support projects over $2 million. The March 2010 SBA Performance Report indicated that more than $360 million in bonds were issued. Furthermore, the SBA Office of Surety Guarantees reports that there have been no defaults on any bonds issued in the above $2 million range since the higher limits were implemented.

Incumbents, especially Democrats, are facing tough political challenges during the midterm elections. The anti-government sentiment has propelled tea party movement candidates to win several primaries and perhaps positioned them to win statewide elections in some states, such as Alaska, Joe Miller; Colorado, Ken Buck; Delaware, Christine O’Donnell; Kentucky, Rand Paul; Florida, Marco Rubio; and Idaho, Raul Labrador. Some of these candidates will win, which will make things interesting when they take their seats for the 112th Congress.

Pictured above are (from left) Harvey King and Tim Matthews of King & Neel, Inc. and Rep. Djou

With less than a month to go before the midterm elections, the current makeup in the U.S. Senate is 56 Democrats, 41 Republicans and 2 Independents. In order to take control of the Senate, Republicans need to win 10 seats, while Democrats need to win only 10 of the 37 seats to retain control. Overall, the 112th Senate will have at least 15 new faces because 8 Republicans and 7 Democrats are not running again. At least a third of the Senate will be serving in its first term, meaning they were elected in 2006, 2008, or 2010. Throw into that mix candidates that ran as a tea party candidate, and the U.S. Senate will have a very different makeup than in years past.

John Bustard (right) of King & Neel, Inc. in Honolulu, HI presented a SuretyPAC check recently to Rep. Charles Djou (R-HI 1st)

The current makeup in the House of Representatives is 256 Democrats, 178 republicans with 1 vacancy. Republicans need a net gain of 39 seats to control with 218. Some political handicappers believe that Republicans have a good opportunity of recapturing the House. NASBP’s Political Action Committee, SuretyPAC, contributed to both Republican and Democrat candidates during the midterm elections that its contributors and SuretyPAC Officers believed would support NASBP’s political agenda. After the midterm elections, NASBP will provide the membership with a scorecard showing how NASBP’s slate of candidates fared. In the meantime, remember to vote on Tuesday, November 2nd.