Strengthening the SBA's Main Lending Program
The Senate Committee on Small Business and Entrepreneurship recently approved the Small Business Lending Reauthorization Act of 2015. The bi-partisan bill strengthens the SBA’s main lending program, the 7(a) loan program. It increases the program’s lending authority for 2015 to $20.5 billion and 2016 to $23.5 billion.
The 7(a) loan volume has already hit historic highs in the first few months of 2015. In 2014, the SBA approved 52,044 7(a) loans totaling $19.2 billion and an additional $1 billion was appropriated in a last-minute supplemental authorization to avoid turning small businesses away. The increase is needed to avoid a program shutdown this year as the current demand is set to surpass the initial lending cap of $18.75 billion.
If approved by the full Congress and president, the bill will allow the program to meet the industry’s projected loan demand without having to ask for an emergency increase, as was required in 2014. Since the 7(a) program is funded entirely through fees paid by borrowers and participating SBA lenders, the increase of this authorization means there is no subsequent cost to taxpayers.
This is good news for small businesses and SBA lenders and it’s an indication that the small business economy is growing.