Earlier this week, the Federal Reserve released its quarterly Senior Loan Officer Opinion Survey on bank lending practices, which showed that 70 percent of domestic banks have tightened their small business lending standards –- an alarming statistic.

In this economy, it is essential that small businesses have access to capital so that they can grow and create new jobs.  While banks continue to pull back on loans to small firms, lending in the Small Business Administration’s flagship loan programs has also declined significantly.

This year, the SBA 7(a) and 504 loan programs are down 57 percent and 43 percent, respectively.  These loans typically make up 40 percent of all long-term capital to small businesses, but the need is now greater because of the subprime lending crisis’s impact on traditional loan markets.

One of the easiest ways to stimulate small business lending is to make SBA loans more affordable.  The first step is to reduce fees, which often serve as roadblocks to the survival and success of American small businesses.  We must ensure that SBA programs promote small business growth instead of standing in the way.

The Economic Recovery Package currently being debated in the Senate includes $615 million to temporarily eliminate fees associated with 7(a) and 504 loans.  This could stimulate as much as $20 billion in small business loans.  Regardless of whether the package passes, the fees on SBA loans must be reduced to mitigate the impact of the credit crunch on small business financing.

At this crucial time for America’s small business owners, the SBA can be a lifeline through its lending, counseling and contracting programs.  During the 111th Congress, Ranking Member Snowe and I intend to continue working on a bipartisan basis to make the Federal Government a better partner to small businesses so that we can create new jobs and encourage entrepreneurship.