House Small Business Committee Holds Hearing on Avenues to Capital Access
“For a business to get off the ground, small business owners must invest their time and financial resources. For most entrepreneurs, this means going to the bank to secure a loan. This capital provides them with the resources needed to compete in the marketplace and contribute to the American economy,” says Chairman Roger Williams.
“Unfortunately, high interest rates and tightening lending standards are a significant barrier to growth for Main Street. We know American entrepreneurs who are just starting their journeys and have little credit history will be subjected to sky-high interest rates under the current economic headwinds.
“As interest rates remain high, the federal government should be looking at other barriers that are making it more expensive to lend money to Main Street America. However, there is a proposal making its way through the Federal Reserve System that will do the exact opposite. I am of course speaking of the proposed Basel 3 capital requirements. If implemented, this rule would require banks to hold more of their capital on the sidelines rather than lend it out to small businesses. This would harm small businesses with thin credit histories the most if this is implemented. Main Street has been playing defense since this Administration came into office, and this rule would only serve to make matters worse.
“For some businesses, they do not want to go to a bank and take on debt. These start-ups may turn to venture capital funds, which invest capital in exchange for equity in the business. This is a risky undertaking for the venture capitalist betting on a business’s success, but this type of financial agreement helped build some of the most successful businesses of our time.
“Despite these tough economic headwinds, Main Street is still finding ways to thrive – just as it always does. We on this Committee are focused on ensuring our nation’s small businesses have a fighting chance, and I’m very much looking forward to today’s discussion.”