The Small Business Administration can resume lending to small businesses through its flagship 7(a) loan program now that Congress has raised the program’s authorization level.
The SBA was forced to suspend 7(a) lending on Thursday after the program hit its $18.75 billion annual loan ceiling with more than two months left in the government’s fiscal year. The Senate passed legislation Friday raising that limit to $23.5 billion, and the House followed suit Monday afternoon.
SBA lenders praised Congress for acting quickly to raise the cap, saying it’s not surprising that this year’s authorization level was reached early, considering the growing demand for loans from small businesses.
‘By listening to small business needs, Congress has enabled 7(a) loans to continue creating private-sector driven jobs from the bottom up, a hallmark of the 7(a) program and its unique partnership with private-sector lenders,” said Tony Wilkinson, president of the National Association of Government Guaranteed Lenders. “Throughout this fiscal year, we have seen unprecedented loan volume, an indication of a growing small business economy that still cannot find long-term financing from today’s overregulated and cautious conventional market.”
The increase in lending authority won’t cost the federal government any money; the cost of the government-guaranteed loan program is covered by fees paid by borrowers and lenders.