Small Business Administration Program Halts Funding After Stronger-Than-Anticipated Demand

Posted By Kalamata Capital LLC || 16-Dec-2015

This summer, the U.S. Small Business Administration (SBA) halted the funding of new loans after hitting the budget limit set by Congress for its main loan guarantee program. Although there remained more than two months left in the fiscal year, the SBA program saw greater demand than it was prepared to handle due to the improved economy. Small businesses in need of funding were forced to wait until the beginning of the fiscal year, starting October 1, to receive funding on their 7(a) loans. (A 7(a) loan is a general small business loan that provides businesses with the funding they need to buy new real estate and equipment or for use to cover short-term working capital needs and pay operational expenses.)

Thankfully, within a week of reaching the budget limit, the House of Representatives unanimously voted to approve the SBA loan program bill that had already been passed by the Senate. The previous cap of $18.75 billion was raised to $23.5 billion.

The President’s administration and several Republicans and Democrats supported this change, saying that is helps all American companies, both large and small, compete against foreign rivals whose governments provide loan guarantees and other forms of assistance.

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Categories: Funding