Shelby Township Baker Tells Congress Basel III Endgame Would Harm Small Businesses

Jill Bommarito, founder and CEO of Ethel’s Baking Co. in Shelby Township, told the House Committee on Small Business today that small businesses are facing significant barriers to accessing capital and the Federal Reserve’s proposed Basel III Endgame would only exacerbate lending challenges facing America’s small business owners.
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U.S. Capitol in snow
Jill Bommarito, founder and CEO of Ethel’s Baking Co. in Shelby Township, testified on Capitol Hill on behalf of small businesses. // Stock photo

Jill Bommarito, founder and CEO of Ethel’s Baking Co. in Shelby Township, told the House Committee on Small Business today that small businesses are facing significant barriers to accessing capital and the Federal Reserve’s proposed Basel III Endgame would only exacerbate lending challenges facing America’s small business owners.

The capital regulation plan will require banks to maintain close to 20 percent more capital, which would result in higher borrowing costs for lower- and middle-income small businesses and entrepreneurs, according to the Financial Services Forum.

The forum is an economic policy and advocacy organization whose members are the CEOs of the eight largest and most diversified financial institutions headquartered in the United States. The forum promotes policies that support savings and investment, financial inclusion, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.

“Many in the halls of Congress would call my business the epitome of the American Dream: a family-run small business enjoying consistent growth with products in retail locations in 49 states,” says Bommarito. “Yet, even with this success, lenders regularly label me and other small businesses as too risky and limit our access to capital.

“This capital crunch is keeping small businesses from reaching their full potential. Policymakers must understand that the Federal Reserve’s proposed Basel III Endgame will only further squeeze small businesses by tightening an already difficult lending environment.”

Bommarito testified that in the past, she resorted to using her personal and retirement savings, getting loans from family and friends, and selling equity in her company when traditional lending sources are not available.

According to Bommarito, the Federal Reserve’s proposed Basel III Endgame rule would only make matters worse.

“If enacted, this rule would not only cut off many small businesses from accessing the capital they need to grow, but it will push small business owners to predatory lenders because they’ll have no other choice. I come from a family of entrepreneurs and have seen firsthand the consequences of predatory lenders. It’s simply unconscionable,” Bommarito testified.

According to an October 2023 survey from Goldman Sachs 10,000 Small Businesses Voices78 percent of small businesses are concerned about their ability to access capital, and only 29 percent said they can currently afford to take out a loan given interest rates. 85 percent said if access to capital continues to tighten, it will impact their growth forecast.

Small business owners believe policymakers need to help stop the proposed Basel III Endgame. The survey also showed 87 percent feel it is important for their elected officials in Washington to weigh in with the Federal Reserve regarding the impact of the proposed Basel III Endgame.

The Federal Reserve closed the comment period on the proposed Basel III Endgame regulation on Jan. 16. Small business owners have mobilized over the past several months to sound the alarm on the proposed rule.

In November, more than 3,000 small business owners, including Bommarito, signed a comment letter expressing deep concerns about the rule and submitted it to the Federal Reserve. On Nov. 14, dozens of small business owners traveled to Washington D.C. to ask lawmakers and senior officials at the Federal Reserve to abandon the rule.

Bommarito is an alumna of the Goldman Sachs 10,000 Small Businesses program and a member of the Goldman Sachs 10,000 Small Businesses Voices national leadership council.

For more information on today’s hearing before the House Committee on Small Business, visit here.