Published: November 02, 2009 09:18 am      

This Week In Washington

Sunday, November 1, 2009 — It wasn’t that long ago that the construction sector was one of the fastest growing and most profitable industries in our state. From July 2006 to July 2007, North Carolina’s population grew 2.2 percent, sixth fastest of all the states. The national growth rate was one percent.

With the state growing at such a rate, the construction industry was thriving. Approximately 477,000 jobs were supported directly or indirectly by the state’s nonresidential construction spending.

It wasn’t just large construction companies. Small construction firms were big business in North Carolina. In 2005, the state had 27,000 construction firms, 92 percent of which employed fewer than 20 workers.

In addition to the firms, 94,000 construction businesses were mainly sole proprietorships. In 2007, construction was responsible for $17 billion of the state GDP of $399 billion.

Then, the housing market crashed and the recession took hold. The construction industry was one of the hardest hit. The industry employed 196,800 workers in April, a decrease of 59,000 jobs or 23 percent of the workforce at its peak in March 2007.

I have said before that the Eighth District was suffering from a recession long before the rest of the country began to feel the effects, but there is no doubt that our construction industry has been decimated by the collapse in the housing market.

For there to be sustainable economic recovery for our nation and for our district, the construction industry must begin to rebound. Once the construction industry stabilizes, other industries will start to recover.

This week, Congress considered the Small Business Financing and Investment Act, which features comprehensive reform to small business lending programs. This will help spur job creation and meet the changing needs of our small businesses.

Small businesses have created two-thirds of the new jobs in our economy over the past decade. It is imperative that we do everything we can to expand the tools available to small businesses to help them succeed.

Specifically, we must do what we can to support the construction sector and help it get back on its feet. More than 1.5 million construction jobs have been lost across the country. North Carolina faced 10.8 percent unemployment in September, and our counties account for some of the highest unemployment in the state. This isn’t the time to sit on our hands.

I sponsored an amendment to this bill to help the construction sector rebound from the devastating effects of the recession. The amendment would allow construction sector small businesses to defer repayment of SBA 7(A) loans for a maximum of one year after the final loan disbursement. SBA 7(A) loans are the most basic and commonly used loans by small businesses. They can be used for general business purposes including working capital, machinery and equipment, renovation and new construction, and debt refinancing.

Normally, companies have to start repaying these loans immediately. By deferring repayment for up to one year, construction companies would be able to finance their operations and repay the debt after the economy has had time to recover and stabilize. This would alleviate some of the financial pressure on our construction companies and allow them to get building again.

In addition to helping the construction industry, this bill will eliminate fees on SBA loans to make loans more affordable for small businesses while expanding support to facilitate small business lending. It will open up affordable credit from smaller lenders to help rural and veteran-owned businesses obtain credit. It raises the SBA loan amounts to help small firms gain access to larger amounts of capital and streamline the application processes to make it easier for small businesses to access loans and investments.

As we continue down the road to economic recovery, we must be prepared for a different economic landscape, one that focuses on small business. Small businesses, especially those in the construction industry, are the backbone of our future and I believe they provide the best opportunity to refuel our economy. Investment in these small businesses is an investment in our future.