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Popular SBA program likely to be capped at $23.5B in 2016

The Small Business Administration’s (SBA) most popular commercial loan-guarantee program will most likely be capped at the present $23.5 billion for the 2016 fiscal year, analysts say, a fact that should mean that Congress won’t have to scramble to raise the level in the last hour again.

Now that Congress has already settled on a higher ceiling for the 7(a) loan program for the final two months of this fiscal year, small business advocates say the amount is most likely to be fixed there for next year.

“The financial services committees in the House and the Senate have both adjusted for $23.5 [billion],” said Giovanni Coratolo, vice president of small business policy for the U.S. Chamber of Commerce.

“It is not a done deal yet, until the appropriations for next year passes. In any case, there is agreement that it should be at $23.5 billion.”  

Last week, after heavy lending in July, the SBA had to suspend backing 7(a) loans after the program reached its authorization ceiling of $18.75 billion. The Senate and House of Representatives moved quickly to pass a higher ceiling, and President Barack Obama signed the bill Tuesday. SBA announced the same day that it was restarting the program. 

Coratolo said the U.S. Chamber has asked for a $25 billion cap. He said, however, that Congress demonstrated this week that it could move the cap up quickly, if lending volumes exceed expectations.

“It is very refreshing to know that they can work very harmoniously in resolving some of these issues that pop up that need immediate attention,” Coratolo said.

The Obama administration originally proposed to cap the authorization level at $21 billion in fiscal-year 2016, according to the SBA's budget justification report to Congress. 

Program should guarantee $22 billion in loans this year

Charles Green, managing director of the Small Business Finance Institute, said the $23.5 billion number should stand. He noted in an e-mail that there are “too many moving parts to modify that at this moment when there is such a larger fight looming.”

He estimated that the total authorizations at the end of the 2015 fiscal year will range between $21.5 billion and $22 billion.

“The trending in first quarter will leave plenty of time for someone to forecast [an] adjusted number and raise it in early 2016,” Green said.

The program, which provides loans up to $5 million, can be used to fund business operations or purchase real estate. If Congress hadn’t acted, it would have meant that all small businesses with pending applications would have had to wait until the next federal fiscal year, which begins in October.

As of Monday, there were more than 1,100 loans pending totaling about $717 million, the SBA said.


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