The U.S. Small Business Administration has run out of money for breaks that made its loans less risky for lenders and more affordable for borrowers.
The economic stimulus bill temporarily increased the government guarantee to 90 percent on the SBA’s flagship 7(a) loans and reduced or eliminated fees on 7(a) and 504 loans, which primarily are used for real estate.
Congress has extended these enhancements four times, but the SBA announced Wednesday that it has exhausted all of the funding provided in the most recent extension.
As a result, the agency has reactivated its waiting list for borrowers who want to receive the higher guarantee and reduced fees when — and if — Congress provides funds for another extension. Pending legislation would extend these breaks through the end of the year, but it is not clear whether this bill will be enacted before Congress leaves for its weeklong Memorial Day break.
Until Congress acts, small businesses seeking SBA loans can either place their applications in a queue, awaiting additional funding, or take a loan without the higher government guarantee or reduced fees.
Since the stimulus bill was passed, more than 60,000 small businesses have received more than $27.5 billion in 7(a) and 504 loans. More than 1,300 lenders have returned to SBA lending because of the higher guarantee and reduced fees, according to the agency.