WASHINGTON – Saying the Small Business Administration's 7(a) loan program is "operating on full cylinders," House Small Business Committee Chairman Don Manzullo (R-Ill.) voted June 27 against legislation that would do away with its zero subsidy.

The legislation, an amendment to the Science, State, Justice and Commerce Appropriations Act for Fiscal Year 2007, would return the SBA's 7(a) loan program back to a taxpayer subsidy, which had been in place two years ago. Manzullo said doing this would put the program in "a state of instability and uncertainty." Manzullo told the committee "if it ain't broke, don't fix it. The 7(a) program ain't broken. In fact, it's operating on full cylinders breaking record after record in program usage throughout all demographic and regional groups." Manzullo argued that if removing the 7(a) loan subsidy was having a detrimental effect, volume should have dropped back to pre-fiscal year 2002 levels. He said there have been more 7(a) loans made thus far in the nine months of FY 2006 than in all of FY 2000 or FY 2001, facts in line with what SBA data shows. According to the agency, 7(a) loan volume doubled to 88,912 loans last year and as of June 2, the agency had approved 65,814 loans totaling $9.68 billion. The approval figure for the same date a year ago was 65,147 loans for $10 billion.

An amendment from Rep. Nydia Velzquez, (D-N.Y.) Ranking Democrat on the House Small Business Committee, that would re-establish a lower 7(a) fee structure exactly as it existed in 2003 and 2004, will not result in cutting fees to small businesses, Manzullo contends.

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"Knowing that the 7(a) program will not be subject to shutdowns or curtailments has proven to be more important than the extra $10 per month in fees charged on an average SBA 7(a) loan," Manzullo said.

CUNA has said a rise of 7(a) fees could hurt credit unions wanting to offer such loans.

Manzullo criticized several groups including the American Bankers Association and the Independent Community Bankers Associations, for not voicing support for the zero subsidy.

"Finally, this is a rare instance where most in the small business community do not want our `help.' The main association that represents 7(a) lenders-the National Association of Government Guaranteed Lenders-now supports a zero subsidy rate," he said. "The American Bankers Association and the Independent Community Bankers Associations are sitting on the sidelines this year." [email protected]

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