U.S.  SBA Announces Restart of Suspended 7(a) Loan Program

There was an opportunity for the leasing industry, and perhaps it still exists,

in the over $750,000 category, when the U.S. Small Business Administration

suspended its loan guarantee program last week due to lack of funding.

The restart, described by a person familiar with the matter as a short-term
fix facilitated by a shifting of funds, began at  noon EST Wednesday when SBA
will start accepting applications for the so-called 7(a) program.  It was stated

they did not know how long the program would be open, as they only received

an additional $470 million in lending authority,  so they put a loan cap of $750,000 per recipient, the SBA said.

Those in the SBA lending industry said the amount was not adequate to even

get by ten days, depending on several factors.

  Last year, the SBA 7a loan program allowed 70,000 small businesses nationwide to borrow up to $2 million from banks, which in turn received a federal guarantee on the loans.

It appears the current administration is reacting to recent economic events

by restricting former tax benefits and lending benefits, such as this popular

program where the government basically guarantees a great portion of the

loan, leaving the “original” lender managing the cash flow account and/or

using other collateral to protect their “investment.”

The SBA has been functioning on a string of temporary budgets since October because Congress has yet to pass an appropriations bill that would fund the loan program through the end of this year. The bill calls for $9.5 billion in lending authority for the SBA. Last year, the federal agency gave out $8.8 billion in 7a loans.

Many small businesses rely on the loans because of the federal guarantee, which lowers their risk to lenders.