MONTGOMERY – The Alabama House of Representatives today took action to improve access to capital for small companies, passing a bill to create the Alabama Small Business Financing Authority.
The Alabama Small Business Financing Act, House Bill 600 sponsored by Rep. Barry Moore (R-Enterprise), would set up an independent entity to assist companies with a variety of credit needs, operating under the Alabama Department of Economic and Community Affairs, or ADECA. Rep. Moore said the bill allows the state to strengthen and streamline ADECA’s existing business loan and grant programs, and allows for further state investment in the future.
“As a small businessman myself, I understand how difficult it is to finance a new venture or fund an expansion,” Rep. Moore said. “Loans are increasingly difficult to come by, even for good candidates with solid business plans. Many small businesses want to grow and create more jobs, but the recession and new federal banking laws have dried up the loan market. We can’t fix what Congress did with Dodd-Frank, and we can’t undo the banking debacle that happened on Wall Street. However, we can work as a state to make it easier for businesses to secure the capital they need to grow and create jobs.”
Others states have seen tremendous success with small business financing authorities. Virginia’s authority has helped facilitate more than $1.5 billion in financing for thousands of new and existing businesses, creating and retaining more than 24,000 jobs. Their program has seen 30-1 private-public funding ratio, and in the first year of operation returned approximately $5.89 in new state revenue for every $1 invested.
Establishing a small business financing authority was a key recommendation of the Speaker’s Commission on Job Creation after its efforts last year seeking ideas on boosting private sector job growth. House Speaker Mike Hubbard thanked Rep. Moore for working with the Speaker’s Office and ADECA to make this legislation a reality.
“Job creation has been and continues to be our top priority this session,” Speaker Hubbard said. “One of the top inhibitors to small business growth is access to capital. Assisting viable companies attain loans is a real-world way to promote job growth. Rep. Barry Moore has worked diligently on this legislation for almost a year. I appreciate his efforts on this bill, as well as his continued dedication toward looking out for the interests of small businesses.”
In August, Alabama was awarded a $31.3 million grant through the U.S. Treasury’s State Small Business Credit Initiative to promote small business lending through three programs: the Alabama Capital Access Program, the Alabama Loan Guaranty Program, and the Alabama Loan Participation Program, all administered within ADECA. The Alabama Small Business Financing Act would codify the current SSBCI programs into law under the Alabama Small Business Financing Authority, an independent entity operating under the authority of ADECA.
Codifying the programs will strengthen and protect them from major administrative changes in the future, ensuring more consistency and less politics in the process. It also gives the programs the legal authority to modify the specific rates and terms of the programs to ensure that bank participation remains strong.