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. Through the first three quarters of the fiscal year, the SBAhad used up 75 percent of its guarantee money, and the fourth quarter is the 7(a) program’s busiest time of the year, Contreras-Sweet said.
A Chatsworth-based online finance company and a distributor of food to hotels in Las Vegas are among the small businesses that could be waiting longer for loans through the program. There is some good news in what’s happening at the SBA.
The proven fact that the restrict was reached so early is a constructive signal for the financial system – business house owners are prepared to tackle dangers together with debt after hunkering down in the course of the recession and its aftermath. Last year, the SBA didn’t approach the 7(a) limit until September, but Congress raised the ceiling before it was reached.
Bell encouraged people to apply for loans as banks are continuing to process applications.
To date this year, the SBA has backed more than 50,000 loans. It’s critical to keep the flow of capital open to small businesses so they can continue to hire and expand. And SBA staffers will evaluate the purposes.
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. Loans that were being processed before the ceiling was reached won’t be affected; their approvals won’t have to wait for Congress to act, according to SBA Press Secretary Miguel Ayala. In the Los Angeles district, which includes L.A., Ventura, and Santa Barbara Counties, lenders made 2104 loans, totaling more than a billion dollars, a sizable share of the nationwide total. The 7(a) program, which guarantees loans for starting or buying a company, purchasing or improving property or equipment or running a company’s day-to-day operations.
Loans for fixed assets like real estate will still be available under a separate program. The maximum loan amount is $5 million.
Halting the 7(a) program could have broader consequences for the entire economy because small businesses are a key source of job creation. Did this come as a surprise? “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.
SBA 7(a) loan program could go on hold at end of July | TuscaloosaNews.com