SBA Loans Thrive in Third Quarter Despite Move to Return 7(a) Funding to Congress

WASHINGTON – Small businesses continued turning to the SBA for commercial credit in record numbers through the first three quarters of fiscal year 2005. Small businesses secured SBA backing under the agency’s flagship 7(a) program for 71,131 loans through the first nine months of the fiscal year, a 21% increase over the same period a year ago and a 49% increase over the same period two years ago. The loans made so far this year amount to $11.1 billion, 19.5% more than in the same period last year, and on a clear pace for a record-setting year for the program. “We had a record year for this loan program a year ago, and we’re going to set another record in 2005,” said SBA Administrator Hector Barreto. “It tells us that the critics are wrong, that small businesses are confident enough to invest in the future of the American economy, and that this program is here to help them do it. It also demonstrates the effectiveness of the self-funded footing on which the President has placed the loan program, and the confidence that lenders have in its stability.” Despite opposition from the Bush administration and key Congressional Republican leaders, on June 15 the House passed an amendment that would restore funding to the SBA’s 7(a) loan program. The amendment to the Science, State, Justice and Commerce Appropriations bill will restore funding for the program to the FY04 level of $79 million and do away with small businesses and lenders having to pay the upfront fees. House Small Business Committee Chairman Don Manzullo (R-Ill.) blasted the amendment saying it would “cripple” taxpayers and President Bush also opposed the amendment. On June 6, CUNA and twelve other trade groups joined together to ask Congress for $79 million to fund the 7(a) loan program for 2006, an amount that was equal to funding obtained in fiscal year 2004. The amendment, sponsored by Congresswoman Nydia Velzquez (D-NY), Ranking Democrat on the House Small Business Committee, passed with a vote of 234 to 189. Meanwhile, the SBA also saw gains in its Certified Development Company, or 504 loan program. Through the first nine months of the fiscal year, the 504 program had issued 6,434 loans worth $3.44 billion, more than 6% ahead of the same period a year ago, when the program had produced 6,058 loans for $2.88 billion. The budget for the current year makes more than $21 billion available to small businesses through the two loan programs, including $16 billion in small business lending under the 7(a) program and $5 billion under the 504 program. [email protected]