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 The House of Representatives on Monday unanimously approved the
Small Business Administration loan program in a bill the Senate had
already passed.
The measure sets the new limit for the SBA's 7(a) loan guarantee
program at $23.5 billion through Sept. 30, up from the previous cap
of $18.75 billion.
Banks make the loans to qualifying small businesses, and the agency
guarantees them, allowing lower interest rates and companies with
short credit histories to obtain capital.
Stronger-than-expected demand for SBA-backed loans, fueled by an
improving economy, meant that the program was exhausted sooner than
expected. In a development first reported by Reuters, the agency was
forced to suspend the funding of new loans as the cap was reached
under a crush of $1.7 billion in applications last week alone.
But the Senate took lightning-fast action to raise the SBA lending
limit in less than a day, marking a stark contrast with Congress'
protracted battle over another federal loan guarantee agency, the
U.S. Export-Import Bank.
Although both agencies guarantee private business loans and are
financially self-sustaining through fees and interest, conservatives
in Congress have targeted Ex-Im for extinction as a nest of "crony
capitalism" that provides "welfare" to giant, politically connected
corporations including Boeing Co <BA.N>, General Electric Co <GE.N>
and Caterpillar Inc <CAT.N>.
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The Obama administration and many Democrats and Republicans in
Congress support the bank, saying it helps American companies, large
and small, compete against foreign rivals whose governments provide
loan guarantees or other supports.
The legislation signed into law on Tuesday also waives some fees for
U.S. military veterans applying for certain SBA loans.
(Reporting by Richard Cowan and David Lawder; Editing by Lisa Von
Ahn)
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