WASHINGTON – CUNA and other trade groups have joined together to ask Congress for $79 million to fund the Small Business Administration's 7(a) loan program for 2006, an amount that was equal to funding obtained in fiscal year 2004. "During the last decade, the funding for this important program has been drastically reduced," CUNA and the trade groups wrote in a June 6 letter to Honorable Jerry Lewis, Chairman of the Committee on Appropriations and the Honorable David Obey, Ranking Member on the same Committee. "In 1995, nearly $200 million was appropriated for the 7(a) program; last year, funding for this program was eliminated completely and the program's costs were shifted to small businesses and their community-based lenders," the trade groups said. "As a result, small businesses now pay steep upfront fees to use this program, impeding their ability to secure the financing they need." The trade groups also pointed out that since 1995, the 7(a) program has provided more than 424,000 loans for more than $90 billion to small businesses. "An adequate appropriation for the 7(a) loan program would stimulate economic growth in communities across the country," the groups' letter states. The recent moves have made the program more expensive and less of an alternative for entrepreneurs unable to secure affordable financing in the conventional markets, the trade groups said. "Due to the higher fees, businesses are now being forced to pay as much as an additional $3,000 in upfront fees. This will cause many entrepreneurs to scale back their plans for expansion and hiring, limiting economic development and job creation in many communities. These changes are also forcing lenders out of the program, reducing small businesses' access to affordable capital. Without a broad network of 7(a) lenders, the program will be unable to achieve its full potential." Rep. Nydia Velzquez (N.Y.), ranking Democratic Member of the House Small Business Committee, who introduced a bill in May that would increase the size of loans eligible for a 7(a) guarantee to $3 million and reinstate an arrangement that combines an SBA-backed loan with a credit union or bank loan in a single financing package, also urged Congress to back the program's funding. "The ability of the 7(a) program, which provides 30 percent of all long term loans, has been hindered since the funding was eliminated and the costs of the program shifted onto small businesses and lenders," Velzquez wrote. "These recent changes have left small businesses having to pay significant upfront fees – anywhere from an additional $1500 to $3000 – to use the program." Rep. Steve LaTourette (R-Ohio) is also backing the proposed funding. "I am a big supporter of the 7(a) program, and by restoring funding we will be able to help keep costs down for both small businesses and lenders," LaTourette said. Along with CUNA, the other groups that have asked Congress to consider the $79 million for the 7(a) loan program are: Aeronautical Repair Station Association; American Hotel and Lodging Association; American Nursery and Landscape Association (ANLA); Associated Equipment Distributors; Independent Community Bankers of America; National Association of Convenience Stores; National Bankers Association; National Procurement Council; National Black Chamber of Commerce; National Small Business Association; United Motorcoach Association; and the U.S. Women's Chamber of Commerce. [email protected]

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

  • 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.

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.