WASHINGTON – A Small Business Administration loan program that was in danger of freezing some loans and decreasing others is still alive today, after Congress stepped in this week with a temporary extension.
The House on Wednesday voted to extend the program and increase its lending authority. The Senate agreed to that plan Thursday, heading off a threatened Friday shutdown of the program.
The new bill triples — to $12.5 billion — the amount of loans the SBA can back, a move supporters said will help at least 90,000 in the nation and create 500,000 jobs.
It also boosts the maximum size of loans will go from $750,000 back to $2 million, the limit that was in place before the program ran into trouble early this year. The bill also increases the loan guarantee limit a lender can provide, from $562,000 to $1.5 million.
Maryland officials had worried that a shortfall in the program would have serious consequences in the state, where small business is credited with creating most jobs. An SBA official said earlier this week that the agency gave loans to almost 500 entrepreneurs in the state from October to February alone.
The small disadvantaged business program and others that would have been put on hold Friday will now continue until June, while 504 loans — long-term fixed-rate loans for expansion investment — are guaranteed until the end of the fiscal year.
“With this legislation in place, I look forward to another record-breaking year . . . and another historic year for America’s small businesses,” SBA Administrator Hector V. Barreto said in a prepared statement.
This is the third time this year that Congress has had to step in to keep SBA loan programs running. A funding shortfall at the end of 2003 forced the agency to shut down for a week, until Congress approved $470 million to reactivate it in January.
When it reopened, the agency was forced to lower the size of the loans it could offer, dropping them from $2 million to $750,000. Because of that, several businesses in Maryland had to reapply or look for loans elsewhere, business leaders said.
In the Senate Thursday, Sen. Olympia Snowe, R-Maine, lamented the fact that the bill did not include a proposal to establish lower fees for lenders, but said at least the program will “operate without restriction through the remainder of the fiscal year.”
-30- CNS 04-02-04