Funding Restored for SBA 7(a) Loan Program

July 29, 2015


pic-money-budgetThe U.S. Small Business Administration’s (SBA) most popular commercial loan guarantee program is back in business after Congress approved and President Obama signed legislation raising the cap on how much money can be loaned through the program.

As he ended his visit to Africa Tuesday, Obama signed a bill that raises the authorization ceiling to $23.5 billion for the 7(a) program. The U.S. House of Representatives voted to increase the ceiling on Monday, July 27, and the Senate approved the same measure last week.

Because of high lending levels, the SBA’s 7(a) loan program reached its statutory $18.75 billion limit in guaranteed loans on July 23, two months before the government’s fiscal year ends Sept. 30. While user fees fund the program, Congress had to approve any increase in the lending authority available for the program.

SBA Administrator Maria Contreras-Sweet last month asked Congress to raise the limit to $22.5 billion. In letters to several lawmakers, Contreras-Sweet warned that without an increase, 7(a) loans would be suspended until the beginning of the new fiscal year on Oct. 1. Through the first three quarters of the fiscal year, the SBA had used up 75 percent of its guarantee money, and the fourth quarter is the 7(a) program’s busiest time of the year.

The 7(a) program is the SBA’s largest, with loans that can be used to buy or operate a business, purchase or improve equipment or property or refinance most types of business debt. The maximum loan amount is $5 million.

As of July 27, there were more than 1,100 loans pending totaling about $717 million, the SBA said, which is indicative of the importance of the loan program.

NSBA applauds the leadership of the Senate and House Committees on Small Business for their stewardship of the program and efforts to pass legislation, H.R. 2499, which included an amendment from Senate Committee on Small Business and Entrepreneurship Chair David Vitter (R-La.) to raise the 7(a) lending cap.