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SBA Hopes To Augment 7(a) Loan Program
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Business New Haven
2/16/2004
By: BNH
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WASHINGTON, D.C. - The U.S. Small Business Administration (SBA) has announced a new legislative proposal that is expected to add at least $3 billion in lending authority to the 7(a) loan program this year. If enacted, the bill would allow the agency to increase lending authority by more than 30 percent, providing money for thousands more small loans in fiscal year 2004. The bill would also remove the current lending cap of $750,000, and allow loans up to $2 million. "This proposal builds on the success of the SBA Express program, and by significantly increasing 7(a) lending authority, will allow the SBA to reach out to tens of thousands more small business owners every year," SBA Administrator Hector V. Barreto said. "The legislation provides more money for small business loans this year, at a time when the program is facing unprecedented demand."
By expanding the SBA Express program, which allows lenders to apply for 7(a) loans using their own forms and processes instead of government forms, the entire 7(a) program would move to a lower guaranty rate of 50 percent. This reform would allow the agency to increase lending authority by over 30 percent. Based on FY 2003 numbers, that increase could have resulted in more than 22,000 additional loans to entrepreneurs, the SBA says.
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