Long-Term Fallout Seen from SBA 7(a) Program's Latest Shutdown

American Banker
Monday, July 27, 2015

The Small Business Administration's flagship 7(a) lending program is likely to resume operating this week after briefly putting new guarantees on hold. Record demand had pushed the program to its $18.75 billion funding limit before both chambers of Congress voted to add nearly $5 billion in additional funding authority. The weeklong shutdown could underscore the program's bipartisan support — or give its critics more ammunition to argue that it is too vulnerable to politics. Under 7(a), the SBA provides guarantees of up to 85% on small-business commercial loans. This year is looking to be the most successful in the history of the program, with gross loan guarantees poised to break the $20 billion threshold in fiscal 2015.