Statement of Administration Policy: H.R. 3719 - Small Business Programs Improvement Act of 1996

(House)
(Meyers (R) Kansas)

The Administration has no objection to House passage of H.R. 3719 as reported by the Small Business Committee and as proposed to be modified by the managers' amendment, but will seek amendments to address the serious concerns described below. The Administration's support for the final version of H.R. 3719 is contingent on the satisfactory resolution of these concerns.

The Administration will seek amendments to H.R. 3719 to:

Maior Concerns

• Delete the requirement hat Federal lending costs for the Low Documentation ("LowDoc") loan program be calculated on a separate basis from other loans made under section 7(a) of the Small Business Act. This requirement would create administrative complexity and potentially lead to increased annual fluctuations in the cost of lending for both LowDoc and non-LowDoc loans. The requirement is also objectionable to the extent that it would contradict the congressionally-enacted Federal Credit Reform Act of 1990 (FCRA) governing subsidy rates for Federal credit programs.
  
  
• Delete the requirement for a contractor to study the methods used by OMB to calculate lending costs. This requirement in part duplicates a similar analysis currently being performed by the General Accounting Office. OMB would be pleased to meet with the concerned congressional committees to discuss the analytical methods that it uses to implement the FCRA.
  
  
• Assure that participation in a pilot loan liquidation program is limited to Certified Development Companies which have two years of experience in liquidating loans.
  
  
• Delete the proposed four-year extension of the Small Business Competitiveness Demonstration Program. This program imposes unnecessarily burdensome paperwork and reporting requirements on contracting agencies. Small businesses would not be adversely affected by the elimination of this program and its objectives could be met effectively through other less burdensome means.

Other Concerns

• Delete the proposed extension of eligibility for disaster loans to individuals or businesses affected by "government action". Disaster assistance should continue to be reserved for sudden events which cause severe physical or economic damage.
  
  
• Repeal the statutory prohibition against Federal Financing Bank financing of section 504 loans.
  
  
• Assure uniformity of interest rates for disaster loans by using the rate on Treasury securities of comparable maturity as the basis for determining the interest rate for all disaster loans.