WASHINGTON (7/28/15)--The Small Business Administration (SBA) reached its 7(a) lending limit for fiscal year 2015 Sunday, meaning the 7(a) program is suspended until it is reauthorized for additional funds by Congress, or until its new appropriation takes effect Oct. 1.
According to the SBA it has experienced unprecedented demand this year. The SBA approved more than 45,000 loans totaling more than $16.5 billion, a 25% increase over the same period last year. Loans comprising the remaining $2 billion under the cap are currently being processed, as there are sufficient funds for loans already accepted for processing by the agency’s Loan Guaranty Processing Center.
The SBA guarantees up to 85% of loans made under the 7(a) program. For credit unions, the guaranteed portion of the loan does not count toward the statutory member business lending cap of 12.25% of a credit union's assets. As of March 30, 377 credit unions have a 7(a) program, according to CUNA data.
The 7(a) program is capped at $18.75 million for fiscal year 2015, which ends Sept. 30. The SBA issued a notice July 22 outlining what would happen when the cap is reached.
“Applications will be processed up to the point of approval and then will be placed into a queue awaiting the availability of program authority,” the notice reads. “Once program authority becomes available due to Congressional action or as a result of cancellations of loans previously approved this fiscal year, applications in the queue will be funded in the order they were approved by the SBA, with the exception that requests for increases to previously approved loans will be funded before applications for new loans.”
Sen. David Vitter (R-La.), chair of the Senate Small Business Committee, along with Sens. Jim Risch (R-Idaho) and Jeanne Shaheen (D-N.H.) introduced an amendment July 23 to the Veterans Entrepreneurship Act of 2015 (H.R. 2499) that would raise the cap to $23.5 billion. The amendment was adopted.
H.R. 2499 went on to pass the Senate July 23, and because it was changed from the version the House passed July 13, it will head back to the House.
(Editor's note: the House voted Monday evening to raise the 7(a) cap to $23.5 billion. See Wednesday's News Now for additional details.)
House Majority Leader Kevin McCarthy (R-Calif.) indicated in his weekly schedule Monday that H.R. 2499 could be considered under suspension of the rules this week.