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SBA's 7(a) Loan Program on Pace to Pass 2004's Numbers

WASHINGTON - Credit unions continue to make strides with the SBA's 7(a) loan program. The latest stats as of April 30, show the agency has approved 54,627 loans totaling $8.3 billion. In all, the SBA approved 81,333 loans totaling $13.5 billion in fiscal year 2004. Last year, borrowers and lenders,...

By Michelle A. Samaad | Updated on June 07, 2005

WASHINGTON – Credit unions continue to make strides with the SBA’s 7(a) loan program. The latest stats as of April 30, show the agency has approved 54,627 loans totaling $8.3 billion. In all, the SBA approved 81,333 loans totaling $13.5 billion in fiscal year 2004. Last year, borrowers and lenders, including credit unions, saw the SBA increase the fee on processing a 7(a) loan of $150,000 or less go from 1% to 2% of the SBA guaranteed portion and loans from $150,000 to $700,000 increase to 3% from 2%. The lender annual service fee also increased to 0.50%, up from 0.36%. The fee for loans over the $700,000 mark remained the same at 3.5%. In December 2004, President Bush approved $16 billion for the 7(a) program. The program is also now operating without a congressional appropriation or at zero subsidy, meaning that the program is self-supported through fees paid by lenders and borrowers. Rep. Nydia Velaquez (D-N.Y.) introduced legislation in May that proposes to reverse that subsidy by reducing the fees lenders and borrowers pay. Her bill would also increase the size of loans eligible for a 7(a) guarantee to $3 million and reinstate an arrangement that combines an SBA-backed loan with a credit union or bank loan in a single financing package, commonly referred to as “piggybacking.” -

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