Small business has been hit with a double-whammy from the U.S. Small Business Administration.
First came the announcement that the SBA’s primary loan program — 7(a) loans — would be capped at $750,000 (USD). Previously the SBA was approving loans as high as $2 Million. That change is effective today, January 8, 2004.
Then came yesterday’s announcement that the SBA has run out of money! All due to Congress’s failure to pass a budget for the SBA before adjourning last month. The SBA has therefore temporarily suspended its 7(a) loan program. This suspension is expected to be lifted as soon as a budget is passed. Despite being temporary, the suspension is a blow to small business.
Small businesses seeking expansion funding and additional working capital suddenly have fewer options. This comes at a particularly bad time, just when the U.S. economy is poised for a strong upturn. As a result, small businesses may find themselves without the funds to hire staff, buy new equipment or take other actions to capitalize on the opportunities ahead.