President Bush's FY 2009 budget proposal for the Small Business Administration gives the agency $657 million in new budget authority for FY 2009, a 15.5 percent increase over the FY 2008 enacted level and a 6 percent increase in core operating budget over FY 2008.

While the proposed budget would increase small business lending capacity by 37 percent, increase funding for SBA's ongoing operational reforms, and support a steady staff of more than 2,100 full-time employees, it also raises fees on loans, provides no funding for microloans, doesn't invest in more contracting oversight, and cuts funding for key business assistance programs like Women's Business Centers and Small Business Development Centers. In fact, after excluding disaster loan program funding, the proposed budget for next year represents a 28 percent cut for the SBA since President Bush took office in 2001, and a three percent cut from 2008 funding.

"The budget we have before us represents a major step backwards," said Senator John Kerry (D-MA), chairman of the Committee on Small Business and Entrepreneurship. Those on the House Small Business Committee shared similar concerns. In February, the House Small Business Committee voted to reject the Administration's proposal and submitted its own recommendations to the budget committee.

Senator John Kerry has introduced legislation to address the expanding credit crunch, which is now beginning to squeeze small businesses. In February, the Federal Reserve released a report showing that one third of U.S. banks have tightened their lending standards for small business loans. Government-guaranteed loans are also down by up to 23 percent. Kerry's bill would reduce loan costs and help more entrepreneurs access the capital they need to start and expand their businesses.

Kerry's legislation will provide $150 million to cut loan fees on government-backed 7(a) loans to small businesses. The 7(a) lending program is the largest source of long-term capital to small businesses in this country. However, 7(a) loans are down 15 percent from this time last year and express loans, which are approved in weeks, not months, and therefore reflect current economic conditions more accurately, are down by about 23 percent.

For loans under $150,000, the bill would cut the fee from 2 to 1 percent; between $150,000 and $700,000, from 3 to 2.5 percent; for loans over $700,000, from 3.5 percent to 3 percent; and for loans over $1 million, the bill would reduce the 3.25 percent fee to 3 percent. The legislation also caps the lenders' fee at .25 percent, down from the current .55 percent.

At the urging of the House Committee on Small Business, the Securities and Exchange Commission (SEC) has officially announced a delay of SOX 404(b) implementation as it applies to small firms. The announcement follows SEC Chairman Christopher Cox's testimony before the Committee last December, when he promised to call for a one year delay on compliance requirements for the nation's smallest public companies. The Commission will also conduct a cost-benefit analysis, which will examine burdens of implementation on small businesses throughout the United States. A recent survey by the U.S. Chamber of Commerce found that 66 percent of small businesses were already incurring significant compliance costs more than a year before SOX 404(b) was scheduled to go into effect.