Capital Briefs: Shrinking Funds Force SBA to Limit Loans

The Small Business Administration said Wednesday that it will indefinitely limit the amount of 7(a) program loans to $80 million per week because of rapidly diminishing funds.

The agency said the move, effective in 15 business days, will give Congress and the Clinton administration more time to agree on a permanent solution to SBA's funding problem.

This is the second time this month SBA has clamped down on 7(a) lending to small businesses so the government won't run out of lending authority before the fiscal year ends on Sept. 30.

On May 5, the SBA halved the cap on 7(a) loans to $500,000, reducing its maximum guarantee to $375,000.

However, the cap backfired when lenders pushed through $1 billion in loans in the 15-day period before the cap kicked in, agency administrator Aida Alvarez has said.