James M. Talent: “Mr. Speaker, the microloan program was established as a pilot program in 1991 and was made permanent in 1997. The…”

“Mr. Speaker, the microloan program was established as a pilot program in 1991 and was made permanent in 1997. The program provides small loans, under $25,000, to the Nation's smallest entrepreneurs. These loans are made through intermediaries, SBA-certified and approved nonprofit lending and business development organizations. These intermediaries borrow funds from the SBA and, in turn, lend those funds to small businesses. In order to protect taxpayer assets, the intermediaries are required to maintain a loss reserve based on the amount of microloans they have outstanding. When the program was made permanent in 1997, changes were also made to modify the loan loss reserve for microloan intermediaries. That legislation specified microloan borrowers were to maintain a loss reserve of 15 percent of their outstanding microloans for the first 5 years of their participation in the program. After that, intermediaries were to maintain a loss reserve equal to 10 percent of their outstanding loans or twice their loss rate, whichever was greater.”