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SBA 7(a) Loan Program Alert from NAGGL


ATTN: SBA Lenders

RE: Want to see a Reduction of SBA 7(a) Program Fees? Then NOW is the time to take action.

A Unique Opportunity
Thanks to unprecedented grassroots support from the SBA lending industry in Campaign Inform 2001, NAGGL has won the battle against fee increases to the 7(a) program for FY 02. And now that victory has provided the 7(a) industry with a unique opportunity.

With the support of 7(a) program participants, NAGGL has been working with both houses of Congress to see that the Office of Management and Budget (OMB) calculates a fair and accurate subsidy rate for the 7(a) program - and we have made real progress. As a result, it may be possible to reduce the 50 basis point lender fee and increase the size of loans considered as "small loans" from $150,000 to $250,000. But to do this, WE NEED THE IMMEDIATE HELP OF EVERY 7(a) PROGRAM PARTICIPANT.

What Can You Do?
  • Because we need to get this message out and gauge the response of Congressmen as quickly as possible, phone calls are the best way to make your contacts. So please call both your U.S. Senators and your House Representative and encourage them to support the reduction of 7(a) program fees. Many elected officials are back home for the August congressional recess, so try contacting both their Washington, DC and local offices. To find your elected officialsí phone numbers, go to NAGGLís Legislative Action Center at http://capwiz.com/naggl/home, enter your zip code under "Elected Officials," and click "Go."

  • There are several key Congressmen whose support would be particularly important in getting a fee reduction passed. For a list of these, please see the attachment to this Legislative Alert. If you live in the district or state of any of these Congressmen, you can have a direct influence on them - but you donít have to live there to have an impact. Even if your member is not on the list of key Congressmen, your own elected officials must hear from you on this issue! You can make just as big an impact by contacting your Congressmen and encouraging them to phone the House and Senate Small Business Committees, as well as other key Congressmen, in support of 7(a) program fee reductions.

  • Contact NAGGL to let us know that your phone calls have been made, and how they have gone - whether good or bad. It is crucial that we know who has been contacted, and how often, so that we can properly concentrate our own lobbying efforts in the right direction. Please call Tony Wilkinson or Karen High at 405-377-4022 or e-mail them at twilkinson@naggl.com or khigh@ naggl.com as soon as your contacts have been made, being sure to provide the following information: your name and contact information; what officials you have contacted (name, district, state); the meeting format (phone, in person, etc.); what their responses were; whether they pledged support, and/or which other Congressional offices they have called or committed to calling.

  • Forward this message to your employees, colleagues, and borrowers, and encourage them to make contacts today to let their elected officials know itís time to reduce program fees. Then encourage them to follow up with NAGGL after making these contacts.
What Should You Say?
Following are a list of talking points you can use in your correspondence with elected officials:
  • The Administrationís Fiscal Year 2002 budget submission shows that the SBA 7(a) program participants have paid almost $1.3 billion in excess fees since 1992.

  • Based on recent information that the General Accounting Office (GAO) provided, the excess fees paid by 7(a) program participants on loans made from 1992 through 2001 will likely increase from $1.8 to $2.0 billion.

  • Excess fees are the same thing as a tax!

  • These excessive fees, or taxes, are a result of overly conservative default estimates used by the OMB. For example, OMB uses a default estimate for FY 01 loans of 13.87%. But based on statistical data, GAO rebuts this, saying that average defaults are 8.81% on loans originated after 1991.

  • As a result, 7(a) program participants are subsidizing the federal government. OMB, in effect, has been levying an unauthorized tax.

  • It is time to REDUCE FEES on SBA 7(a) program participants. The SBA 7(a) program should not be run at a profit to the federal government.
Now is the Time
The success of this legislative effort will depend fully on how actively 7(a) program participants pursue it, and it is not likely that another opportunity of this kind will arise in the foreseeable future. So please make this effort a top priority over the next few weeks. If it is successful, the benefits will last much longer than that. Thank you for your help in this critical time.

Anthony R. Wilkinson
NAGGL President & CEO

Full Legislative Alert with list of Key Congressmen & Phone Numbers - PDF format

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