Rep. Nydia M. Velázquez (D-NY), who is the lead Democrat on the House Small Business Committee, has introduced a new bill, “The Puerto Rico Small Business Assistance Act,” designed to spur small business growth and entrepreneurship in Puerto Rico.”
“We’ve seen time and again throughout the U.S. how entrepreneurship can be a path out of poverty and stimulate local economic activity,” Velázquez announced. “This package of legislation will help small firms in Puerto Rico meet their capital needs, obtain federal contracts and, ultimately, grow, creating good-paying jobs along the way.”
The proposal relies on existing programs at the Small Business Administration (SBA) to ignite economic growth in Puerto Rico. To assist companies seeking capital, the bill increases the portion of a loan the U.S. government can guarantee under the SBA’s “7(a)” lending program. The bill also seeks to lower fees paid by private lenders within in the program.
“We’ve seen in the past that adjusting the guarantee level and fees in the SBA lending programs can be an effective way to get the small business credit spigot flowing,” Velázquez noted. “Making the changes in this bill will mean more opportunity for small companies in Puerto Rico to secure financing, expand their operations and hire workers.”
The measure also expands the availability of micro-loans for smaller ventures in Puerto Rico and incentivizes lenders to target financing to Puerto Rico through the “504” program, which helps businesses fund capital intensive projects, such as construction and heavy machinery purchases. In Fiscal Year 2015, there were just four 504 lenders in Puerto Rico, and SBA only approved about 64 loans, totaling about $25 million according the data provided by the Velázquez office.
“These changes are meant to help businesses at different stages of growth,” Velázquez noted. “By adjusting the micro-loan program, we can help the smallest of firms in Puerto Rico seeking assistance as they get off the ground. By creating incentives in the 504 initiative, we can assist larger firms that are looking to make capital intensive, job creating investments.”
Velázquez’s legislation also reforms federal procurement policy to create preferences for local companies to receive federal contracts for work done within the U.S. territory. Puerto Rico receives relatively few federal contracts, and when such contract work is performed on the Island, it often is done by companies based in States. In fact, Velázquez’s office reports that 40% of federal contract work performed in Puerto Rico is awarded to companies that are not on the Island, and the total awards to Puerto Rican small businesses declined from about $426 million in FY 2014 to about $342 million in FY 2015.
The bill would also provide for a Veterans Business Outreach Center in Puerto Rico to help veterans launch new businesses or grow companies that they already own.
“Puerto Rico faces severe economic challenges,” Velázquez concluded. “Now, that Puerto Rico has entered Title III and started addressing its debt crisis, we must begin laying the groundwork for long term, sustainable growth. Small businesses must be part of the equation and it is my hope that we can move this bill through the process in a bipartisan fashion to help achieve this goal.”
The bill was introduced with six co-sponsors:
- Rep. Jennifer Gonzalez-Colon (R-PR)
- Rep. Jose Serrano, Jose E. (D-NY)
- Rep. Thomas MacArthur (R-NJ)
- Rep. Darren Soto (D-FL)
- Rep. Sean Duffy (R-WI)
- Rep. Stephanie Murphy (D-FL)
Efforts to assist Puerto Rico often show this kind of bipartisan support.