Chris Hurn, IFA Member and CEO/Cofounder of Mercantile Capital Corporation, was invited to testify before the Senate Committee on Small Business and Entrepreneurship on Thursday, March 29 2012. As a small business lender specializing in the SBA 504 loan program, he was asked by the Senate Committee to comment on the SBA FY 2013 budget request. Specifically, Hurn proposed a road map for how to get the SBA 504 loan program back to its historical zero-subsidy status.
Through most of its history, the 504 program has been supported by user fees rather than government appropriations. This hasn’t been the case in recent years, due in large part to the “Great Recession” and ensuing credit crisis. Hurn proposed three things to reestablish the 504 as a zero-subsidy program: 1) empowering CDCs to make recoveries in the 504 loan program and incentivizing them to do so; 2) extending the 504 Refi and FMLP programs by at least one year, through September 2013; and 3) implementing extra measures that may include lowering the 504 program authority and/or increasing borrower fees above their statutory minimum. A combination of these things, Hurn says, will help clean up the SBA budget by getting the 504 back to zero-subsidy status.
To read Hurn’s full testimony that was submitted to the Senate Committee on Small Business and Entrepreneurship, go here.