By Anthony R. Wilkinson - 12/01/09 12:39 AM EST
Confirmation by the Obama administration that the economic stimulus funds earmarked for the U.S. Small Business Administration’s 7(a) loan program have run out is bad news for small business and the workers they employ. But the depletion of the funds is also proof that the loan program was, and is, a critically important part of the nation’s efforts to recover from this deep recession. Small-business owners were able to have the credit needed to create and retain jobs.
The SBA data show that 7(a) guaranteed loan volume has been steadily increasing since the February inception of the Recovery Act stimulus program.
SBA officials are proud to state that the $1.9 billion in loans made in September 2009 was the largest monthly amount of credit extended since August 2007. That amount would likely have been exceeded in November had there been sufficient funding to continue the stimulus provisions. Members of the National Association of Government Guaranteed Lenders (NAGGL) account for over 80 percent of all 7(a) loan activity because the program gives lenders, both large and small, the confidence they need to make loans and provide the capital small businesses need not just to survive but to recover from this crippling recession.
The stimulus provisions for SBA lending and small business are working. The 7(a) program is responsible for more than 10 percent of the jobs that have been created or retained by the stimulus funding; however, the 7(a) program received less than one half of one percent of the stimulus funds. America’s small businesses still need access to affordable credit so they can continue to create the jobs that this nation so desperately needs.
With the announcement that the 7(a) loan program funds have run out, small business must go on a waiting list but America’s recovery can not wait.
Congress must act quickly to extend the stimulus funding for 7(a) lending so that the momentum we have seen over the past few months can continue.
Small businesses need this continued opportunity; America’s recovering economy deserves this support.
There is also legislation making its way through Congress that would increase the maximum size of a 7(a) loan from $2 million to $5 million and make a commensurate increase in the maximum guaranteed portion. Small businesses will be helped. Jobs will be created and retained.
Small businesses need choices and Congress has the ability to keep credit flowing. But enough talk. It is time for action. Making more credit available to small businesses is the lifeline for our communities and the lifeblood for our economy.
From Anthony R. Wilkinson, president and CEO, National Association of Government Guaranteed Lenders Inc., Stillwater, Okla.