Capital Access for Women a Growing Priority for DC Lawmakers

By Jennifer Mangone, WIPP Government Relations

Last month was a busy time for WIPP here in Washington. From testifying before the House Small Business Committee (HSBC) to hosting forums on women’s entrepreneurship in both the House and Senate, the importance of WIPP’s 2019 Policy Pillars was heard ‘round the Hill. After all that work in such a short span, one of our Pillars, Increasing Access to Capital for Women-Owned Businesses, is already gaining traction through legislation on the SBA Microloan Program.

The Microloan Program assists entrepreneurs in obtaining loans under $50,000. SBA provides nonprofit intermediary lenders with direct loans. Intermediaries, in turn, provide Microloans to small businesses. At 48.7%, women are the greatest consumers of these Microloans.

Testifying on behalf of WIPP in a HSBC hearing on Modernization of the Microloan Program, Michelle Richards, Executive Director of the Great Lakes Women’s Business Council, called the 1/55th rule the number one pain point for microlenders and advocated for its elimination in any modernization of the program.

The 1/55th rule, which was implemented as part of the pilot program in 1991, requires that for the first half of each fiscal year the lesser of $800,000 (or 1/55th of available loan funds) is made available to loan intermediaries in each state. This rule restricts the availability of capital for small businesses in larger states.

Our team worked closely on this issue with Senator Tammy Duckworth (D-IL), who just introduced the Microloan Program Enhancement Act. The bill adopts two of WIPP’s key recommendations on improvements that should be made to the Microloan Program.

First, the bill would eliminate the 1/55th rule. Second, Senator Duckworth’s bill would require SBA to make publicly available previously unreleased data, another prime recommendation from WIPP’s testimony. The data would include the number of small businesses that remain in business, the number of jobs created and retained, and the impact of the elimination of the 1/55th rule on rural areas by consumers of the Microloan Program.

Meanwhile, back on the House side, Rep. Scott Tipton (R-CO) recently used a hearing in the House Financial Services Committee (HFS) with CEOs of large banks as an opportunity to ask the CEO of Goldman Sachs about initiatives to right the discrepancies in investment to women-owned businesses. Rep. Tipton is the Co-Chair of the House Small Business Caucus and co-led a roundtable on women’s entrepreneurship with WIPP last month.

Today, only 16% of conventional loans and 4.4% of commercial loan dollars go to women-owned businesses. WIPP will continue to push for increased access to capital for women and applauds those in Congress like Senator Duckworth and Congressman Tipton, who are pushing with us.