ACTION ALERT! CONVERSION LOAN GUARA

[Greg Bischak <ncecd@igc.org>]

The following letter requesting the release of loan guarantee monies
will be sent to Josh Gotbaum (DOD), Dorothy Robyn (National Economic
Council), Laura Tyson (NEC), Phillip Lader (Small Business
Administration), Sen. Diane Feinstein, and Rep. Ron Dellums. If
your organization can sign on, please call the National Commission
for Economic Conversion and Disarmament (ECD) at 202/728-0815 by
close of business Wednesday, December 21, 1994.

December 19, 1994

XXXXX

Dear XXXXX:

As you know, the FY95 Defense Authorization and Appropriation Acts
contained a $2 billion loan guarantee program to help small and
medium-sized defense contractors convert or otherwise adjust to
defense cutbacks. This program was underwritten with a $50 million
authorization and appropriation and qualified by several important
criteria, including job creation and job retention, and dual-use.

Shortly after the funds were appropriated, we learned that the
Department of Defense (DOD) was to enter into a Memorandum of
Understanding (MOU) with the Economic Development Administration
(EDA) of the Commerce Department, and the Small Business
Administration (SBA) in order to channel the funds through these
agencies. $20 million was to be given to EDA while $30 million was
to be given to SBA.

Since then we learned that the EDA will not receive its share of
funds since it allegedly lacks the administrative mechanisms for
loan guarantees to medium-sized businesses. Also, an MOU has not
yet been signed with SBA, despite a December 5 deadline, because of
a disagreement about funding of administration costs. While DOD
insists that none of the $30 million can be used by SBA for
administration, SBA is unequipped to administer a $30 million
program without additional funds.

We urge you to use some of the $20 million that would have gone to
EDA to cover administrative costs for small business conversion
loans through SBA. This will ensure that the loan guarantee program
is implemented in a timely and effective manner.

Please contact us as to the possibility of this option. We look
forward to your response.

Sincerely,