HR3174-119

What This Bill Does

The Made in America Manufacturing Finance Act would increase selected Small Business Administration financing limits for small manufacturers. For the new Small Business Act category, the business must qualify as a small business concern, have its primary business in manufacturing classification sectors 31, 32 or 33, and locate all production facilities in the United States. This is a business-classification and production-location test, not a requirement stated in the bill that every input be American-made or that the business have only American owners.

For these manufacturers, the general 7(a) ceiling on the SBA business loan fund's outstanding and committed amount to a borrower rises from $3.75 million to $7.5 million, with a $10 million gross-loan ceiling rather than $5 million. The international-trade branch rises from $4.5 million to $9 million of deferred SBA exposure and from $5 million to $10 million gross, with the relevant working-capital, supplies and export-financing sublimit increased from $4 million to $8 million. The bill also increases the Export Working Capital Program's maximum gross loan for small manufacturers from $5 million to $10 million. Separately, it raises the manufacturing-project loan cap under 15 U.S.C. 696, used in the 504 program, from $5.5 million to $10 million per project. That statute already contains a matching small-manufacturer definition.

Who Benefits and How

Eligible domestic small manufacturers gain access to larger potential SBA-supported financings for operations, trade and investment, subject to approval and the programs' other requirements. Small manufacturing exporters gain more room for export working capital and qualifying international-trade financing. Participating banks and other SBA lenders may make larger eligible loans, while Certified Development Companies can support larger qualifying manufacturing projects through the 504 structure. These are financing opportunities, not grants or an entitlement to approval. The 504 amount is the covered program loan limit, not a ceiling on the entire project's combined private lending, SBA-backed financing and borrower equity.

Who Bears the Burden and How

The Small Business Administration must administer larger permitted exposures and distinguish qualifying manufacturers from other applicants. Participating lenders and Certified Development Companies still have underwriting and program-compliance responsibilities; borrowers still must repay debt and meet applicable requirements. Federal taxpayers could face larger losses per approved defaulting loan because the permitted dollar exposure is higher, but the bill does not establish that net losses or subsidy costs will increase: utilization, fees, recoveries and credit performance matter. Small manufacturers with production facilities outside the United States do not qualify for these special higher limits, but the bill does not take away their otherwise available ordinary program eligibility. It does not appropriate funds, forgive debt, waive creditworthiness rules or raise the general ceilings for every small business.

Key Provisions

• Defines eligible Small Business Act manufacturers by small-business status, primary manufacturing classification in sectors 31-33, and entirely U.S.-located production facilities.
• Expands the manufacturer 7(a) limit to $7.5 million in SBA outstanding and committed exposure with a $10 million gross-loan ceiling; the ordinary $3.75 million and $5 million thresholds remain for other borrowers.
• Expands qualifying international-trade financing to $9 million in deferred SBA exposure with a $10 million gross ceiling and an $8 million working-capital, supplies and export-financing sublimit.
• Expands Export Working Capital Program loans for small manufacturers to $10 million, while retaining the ordinary $5 million maximum for other borrowers.
• Expands the 504 manufacturing-project loan cap from $5.5 million to $10 million per project without changing the separate statutory caps for nonmanufacturing and energy projects.