Small Business on Capitol Hill (and Beyond)

Here is the Small Business blog's monthly roundup of legislation, regulation and other government activity affecting small businesses:


* A new bill addressing small business lending and oversight was introduced by the chairman and ranking Republican on the Senate's small business committee. Panel Chairman John Kerry (D-Mass.) and Olympia Snowe (D-Maine) offered S. 2288 to create performance standards for the Small Business Administration's 7(a) program addressing working capital and its 504 plan focused on fixed assets. Critics of those programs say the SBA's lender monitoring system does not adequately explain the metrics of lenders' risk ratings or identify problems so lenders can proactively fix defaults and losses. The committee held a hearing on the matter, partly prompted by $76 million in fraudulent loans originated by the Business Loan Center, a large SBA lender.

* Two major pieces of legislation include language on the controversial Small Business Innovation Research (SBIR) program. The program provides up to $850,000 in early-stage research and development funding directly to small tech firms or individual entrepreneurs who form a company. The 2008 appropriations bill, H.R. 3222, funding the Defense Department contains $85 million in additional funding for the initiative. That bill was signed into law Nov. 13. The National Defense Authorization Act for fiscal 2008, H.R. 1585, includes language extending the SBIR program through fiscal 2010. Other language in the bill would extend Defense's Commercialization Pilot Program through fiscal 2012. Sens. Kerry and Snowe created that program in 2005. House and Senate conferees still must hash out their differences over the defense authorization act.

* A wide-ranging bill aimed at improving federal procurement opportunities for small businesses was introduced Nov. 1 by Kerry and Snowe and co-sponsored by panel member Ben Cardin (D-Md.). S. 2300 addresses contract bundling, the integrity of subcontractors, improving procurement programs, the acquisition process and small business size.

* There are two similar bills in the House and Senate addressing mental health and addiction. The Senate has passed S. 558, the Mental Health Parity Act. H.R. 1424, known as the Paul Wellstone Mental Health and Addiction Equity Act, is awaiting a vote by the full House. The bills differ slightly. The House bill mandates employers to provide coverage on all illnesses listed in an American Psychiatric Association publication. The Senate bill only requires that employers offering mental health coverage to provide the same level of coverage that they offer on medial and surgical benefits. Both bills exempt firms with less than 50 employees from compliance.

* The House Education and Labor Committee approved a bill that would renew the Higher Education Act for five years. H.R. 4137 resembles S. 1642 that the Senate passed in July. The measure includes a provision creating a grant program for colleges to collaborate with local businesses to help prepare students for jobs.

Hearing Highlights

* The Senate Finance Committee on Nov. 14 hosted a hearing on the federal estate tax. Uber businessman Warren Buffet, who is chairman and CEO of Berkshire Hathaway, spoke at the hearing in support of the tax. If Congress doesn't act soon, the estate tax will increase by 2011. "This uncertainty requires business owners to continue with estate-planning strategies that are costly, cumbersome and time consuming," according to the National Small Business Association.

* The House Small Business Committee on Nov. 15 held a hearing to examine possible improvements to the Regulatory Flexibility Act to reduce the regulatory burden on small firms. Separately, the committee's chairwoman, Nydia Velazquez (D-N.Y.), highlighted a study revealing the high cost of implementing the so-called Sarbanes-Oxley accounting requirements. The study was conducted by the U.S. Chamber of Commerce and small business groups, according to a statement by Velazquez.

Government Departments and Agencies

* Federal Judge Charles Breyer who is presiding over a lawsuit focused on the Homeland Security Department's "no-match" rules, temporarily suspended the trial on Nov. 23. The suspension gives the department until March 24 to survey small business owners and rewrite the rules if necessary. The rule was first published in August and would implement new procedures for the Social Security Administration's letters sent to employers if they hire someone who may have an "inaccurate personal identity information" such as an incorrect Social Security number. The regulation had said that employers could be held liable if they fail to take specified steps within 90 days of receiving a "no-match" letter. A lawsuit on the rule was filed in October by the AFL-CIO, American Civil Liberties Union and the U.S. Chamber of Commerce.

* Any federal contractor receiving awards of greater than $5 million and involving work for more than 120 days must have a written code of "business ethics and conduct," according to a notice in the Federal Acquisition Circular. The final rule, which takes effect Dec. 24, also exempts small businesses from a requirement for a formal training program and internal control system.

* Small businesses continue to fuel job creation in the U.S. economy, according to new data from the Small Business Administration's Advocacy Office. The office reports that small businesses added 1.9 million new net jobs between 2003 and 2004. Small businesses employ 58.6 million people. Meanwhile, the data show that self-employed businesses increased to just over 16 million in 2006 compared to 15.8 million in 2005.

* Separately, the SBA released a disaster planning guide for small business owners Hard copy guides will be distributed to SBA district offices and resource partners around the country.

By Sharon McLoone |  November 30, 2007; 12:00 PM ET Regulation Legislation
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