SBA loans on hold, cap reached
Small business groups are urging federal lawmakers to extend the Small Business Administration’s signature loan program to aid small businesses, which reached its funding limit this week.
The U.S Small Business Administration has done such a good job making its guaranteed 7(a) loan program more attractive that the program has run out of money several months before the agency’s fiscal year is over. For real estate purchases, these are much faster than conventional or SBA loans with lower rates than hard money financing. “We have appropriately secured SBA numbers for all pending loan closings to keep our customer service “business as usual” in the interim”.
“Inaction is unacceptable because too many small businesses rely on this important SBA program”, said Vitter, a candidate for Louisiana’s governor.
Congress sets the 7(a) program’s lending limit and can vote to authorize raising it. San Gabriel Valley Congresswoman Judy Chu is co-sponsoring a bill that would do just that and is hoping her colleagues will take action before heading off on a long recess next week. Can businesses still apply for loans? If Congress doesn’t act, businesses will have to wait for October 1 to get their loans OK’d. And what happens to loans already submitted to the SBA? Lifting the statutory cap would not require new funds to be appropriated, as the program sustains itself through fees paid for the guarantees.
The SBA Express program, which promises quick approval, and Veterans Advantage loans, designed for veterans and their spouses, are also on hold because they are part of the 7(a) program. Based on that level of demand, the temporary suspension of the 7(a) program places over 16,000 loan applications for over $15 billion in funding in jeopardy. Did this come as a surprise? At noon Thursday, the company reached the $ 18.seventy five billion restrict set by Congress on the quantity of 7(a) loans it may possibly assure in a fiscal yr, with greater than two months to go earlier than the yr ends September 30.
Rep. Nydia M. Velázquez, New York Democrat, on Wednesday introduced legislation (H.R. 3132) that would raise the cap to $23.5 billion, allowing the initiative to continue functioning until the cap can be addressed again when Congress passes legislation for the start of the agency’s new fiscal year. “Failure to raise the cap on 7(a) lending would be detrimental to small businesses, particularly [those] that have been historically underserved”, the Small Business Majority, a business group, said in a letter to lawmakers Thursday.