A wave of small business optimism has been sweeping the U.S. small business sector for the past few years, but that optimism almost expired last week when a popular government-backed small-business lending program offered through the SBA was suspended after it reached its limit for the year.
According to a release issued today a bill to increase the lending authority for the 7(a) loan program to $23.5 billion for FY 2015 was passed by Congress and signed by the President. As a result, effective this afternoon, the Small Business Administration is again able to guarantee 7(a) loans this fiscal year.
More than 1,100 potential borrowers had submitted applications that were potentially on hold until lending could resume.
As Charles H. Green of Advice on Loan reported earlier this month "The 7(a) program has experienced record volumes this year, which with sufficient funding SBA 7(a) Loan Guarantee Program authorization, will break all previous records for the loan guarantee product."
Take a look at the numbers. In the first graph SBFI tracked the $ loan volume each month between the current period and the same period during the previous two fiscal years for the SBA 7(a) loan program
Source: Advice On Loan
7(a) Loans <$150k $ Approved
The second graph tracks the $ loan volume each month between the current period and the same period during the previous two fiscal years for SBA 7(a) loans <$150k.
Source: Advice On Loan
Small businesses who depend on the 7(a) program are breathing a sigh of relief with safe passage of this emergency bill. Rep. Nydia Velazquez of New York, the committee’s ranking Democrat said "Turning the SBA’s spigot back on means more firms will have resources to invest in their operations, expand and ultimately create good-paying jobs." Steve Chabot (R, Ohio), chairman of the House Small Business Committee, said “The Committee has recognized the growth in the 7(a) program for a while, which is why we recommended a raise in the cap for the next fiscal year.”
It's great to see such a strong bipartisan effort come together on this. If the bill was not signed this week, small businesses would have been effectively on hold until the next fiscal year, which begins on October 1st.
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