Bill Explanation: Investing in America’s Small Businesses Act of 2017
Summary of the Investing in America’s Small Businesses Act of 2017 (H.R. 1833)
This bill is designed to help small businesses, especially those in underserved areas, get better access to affordable financial products and services. Many small businesses, particularly those owned by women and minorities, struggle to get loans and capital from traditional banks. This bill aims to fix that by supporting community development financial institutions (CDFIs), which are banks and lenders dedicated to helping these types of businesses.
Key Points in Simple Terms:
- Small Business Challenges:
Many small businesses can't get loans through regular banks, which limits their growth and ability to create jobs.
- Role of CDFIs: CDFIs focus on underserved communities and have been shown to successfully support small businesses in these areas.
- Loan-Loss Reserve Funds: The bill proposes giving grants to CDFIs so they can create special reserve funds. These funds help CDFIs cover losses from loans that don’t get repaid, so they can take more risks and lend to small businesses that might not otherwise qualify for loans.
- Technical Assistance Grants: The bill also provides money to help CDFIs improve their loan programs—for example, by funding technology, staff training, or helping borrowers with support services.
- Grant Conditions: CDFIs that receive grant money must contribute at least half the amount themselves (matching funds). The grants cannot be used to make loans directly, only to support the loan programs and cover losses.
- Loan Details: Loans made under these programs are capped at $50,000, have no penalties for early repayment, and should be affordable for small businesses.
- Funding Authorization: The bill authorizes $25 million per year (from 2018 to 2023) for these programs, plus $2 million per year to cover administrative costs.
Why This Matters:
Supporting small businesses helps boost local economies by creating jobs and increasing tax revenue that can be used for community services like schools and hospitals. This bill supports financial institutions that focus on communities and businesses that have traditionally been left out of mainstream banking, helping to build stronger and more resilient local economies.
In short:
This law encourages safer lending to small businesses in underserved areas by helping community lenders manage risks and expand their services, ultimately empowering small business owners with better access to the funds they need to grow.