Budget: Higher SBA Funding, Loan Cap

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American Banker

By: Kate Davidson and Chris Dieterich

February 2, 2010

 

President Obama's fiscal 2011 budget proposal would provide $994 million for the Small Business Administration, a 21% increase over the 2010 enacted level.

The proposal calls for $165 million in credit subsidies for Section 7(a) general business loan guarantees, up 106% from $80 million in the 2010 budget. The increased subsidies would support about $16 billion in term loans and $1.5 billion in revolving lines of credit. In the budget request, the SBA said it wants to expand the number of 7(a) borrowing partners by 15%, to 3,000, by Sept. 30, 2011.

 

The budget request also would raise the size cap on small-business loans eligible for the government's guarantee.

 

The maximum 7(a) loan size would increase to $5 million from $2 million; 504 loans would increase to $5 million from $2 million for regular projects and to $5.5 million from $4 million for manufacturing projects; and microloan limits would rise to $50,000 from $35,000.

 

The cap increase has received strong support from business trade associations. Legislation including similar proposals was approved by the Senate Small Business Committee in December.

 

Tony Wilkinson, the president of the National Association of Government Guaranteed Lenders, said he hopes the legislation is signed into law before the budget passes.

 

"If we're able to raise the loan size to $5 million, we can push that upper limit and get capital in the hands of small businesses," he said.

 

James Ballentine, the senior vice president for political operations at the American Bankers Association, praised the overall plan to give SBA more money.

 

"The SBA is long overdue to receive increased funding," he said. "They had seen such a dramatic decline over the past six or seven years."

 

The proposed budget also would provide $203 million for disaster-loan administrative expenses, $126 million more than in fiscal 2010.

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This page contains a single entry by Ernest Roberts published on February 2, 2010 3:33 PM.

The Places They Go When Banks Say No was the previous entry in this blog.

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