X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON-The U.S. Small Business Administration reopened its 7(a) loan program Jan. 14 after a temporarily halt with an additional $470 million in lending authority and a $750,000 loan cap. Short of funds because of Congress’ failure to pass the omnibus appropriations bill, SBA temporarily halted 7(a) guarantees on Jan. 6. The $470 million comes from left over funds from last year, SBA press Director Mike Stamler said. He explained that the agency needed approval from Congress and the Office of Management and Budget to tap into the funds, which it received. “It is critical to our nation’s small business community that the 7(a) program is back up and running as quickly as possible,” SBA Administrator Hector V. Barreto said in announcing the program’s reopening on Jan. 14. “We are reopening the program tomorrow with the funding that Congress has approved, and the SBA will provide 7(a) loans as long as the necessary funding is available. However, it is extremely important that Congress pass an annual appropriation to keep this vital loan program open, without interruption.” The current continuing resolution runs through Jan. 31, and SBA warned that the new funds might not last that long if demand remains at its currently high level. Congress reconvenes on Jan. 20. According to an update on the situation sent to SBA lenders, the agency noted an uptick in loan demand from October to December last year. In December, SBA said it planned to institute a $750,000 cap through the end of fiscal year 2004. However, the agency pointed out that the cap should have no affect on the majority of small business borrowers since 95% of all 7(a) loans are under $750,000 historically. When the cap was announced, loan guarantee requests picked up sharply with borrowers to try to beat the start of the new cap, which led to the shut down. According to SBA, the average daily loan amount for November was $51 million, but that rate tripled to $150 million a day following the new cap announcement. Until Congress approves a spending bill, SBA encouraged lenders to suggest its Certified Development Company Program, known as 504, which can be used for real estate, machinery, and equipment. The 504 program is not subject to the $750,000 cap. “In our discussions with SBA, staff had shared with us their expectation that the program would be operational again shortly,” CUNA Associate General Counsel and Senior Vice President of Regulatory Advocacy Mary Dunn said. “We’re pleased that is in fact the case and hope any future disruptions can be avoided, particularly since final appropriation for FY 2004 has not yet been approved. As we’d indicated to SBA last week, we continue to stand ready to help on Capitol Hill if needed.” CUNA had previously sent a letter to Barreto offering the trade association’s assistance to reboot the popular lending program. CUNA President and CEO Dan Mica expressed “the strongest support” for the program. “As you know, CUNA has the highest regard for your leadership, and we recognize the situation that the agency faces regarding congressional funding of its budget,” he wrote. Mica offered CUNA’s services on Capitol Hill to help obtain funding. [email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

 

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times
Live Chat

Copyright © 2022 ALM Media Properties, LLC. All Rights Reserved.