WHEREAS, The Administration's proposed FY 2003 budget nominally increased the SBA's 7(a) loan program by $87 million; and

WHEREAS, Miscalculations of the subsidy rate, which was established to cover projected loan defaults, resulted in almost $1.5 billion in excess funds. Instead of these funds being used to further fund the 7(a) loan program, they were returned to the US Treasury; and

WHEREAS, This translated into an overcharging of the 7(a) loan program, and an excess additional tax to small business borrowers; and

WHEREAS, If nothing is done to revise the Administration's proposed Budget and the OMB's dictated subsidy rate, the 7(a) loan program will only be able to guarantee $4.85 billion in loans for FY 2003, less than half of the approximately $10 billion that the agency was able to guarantee in FY 2002; and

WHEREAS, This very significant reduction in small business loans, from the previous year, would have a drastic negative impact on small businesses's ability to access much needed capital; and

WHEREAS, Based upon the critical role which small business plays in the stability of the nation's economy, any action which restricts access to capital for this vital business sector will have a destructive national economic impact; now, therefore be it

RESOLVED, That this Senate of the State of Rhode Island and Providence Plantations hereby memorializes the Congress of the United States to restore full funding to the Small Business Association's 7(a) Loan Program; and be it further

RESOLVED, That the Secretary of State be and he is hereby authorized and directed to transmit a duly certified copy of this resolution to the Rhode Island Congressional Delegation.