Some Changes Made In SBA's 7(a) Loan Program
The omnibus spending bill approved by Congress last week will increase the size of allowable loans under the U.S. Small Business Administration's flagship 7 (a) program, but also make it tougher for some borrowers to obtain the loans by eliminating the federal subsidy on fees and other charges.
The compromise measure passed by lawmakers increases the size of the loans eligible for the federal 75% subsidy from $1.3 million to $2 million.
It also funds the 7(a) program, which has become popular for many credit unions, at $14.5 billion for 2005, about the same level of funding as was available this year. The bill also increases the maximum amount of a loan available under the SBA Express program, which provides expedited funding to small business, to $350,000 from $250,000.
The SBA program has become increasingly popular among credit unions since the federal agency opened it to all federally insured credit unions last year. Previously, only credit unions with community charters, those deemed to be serving entire communities, were eligible to join. Since then credit union participation in the program has more than doubled to over 100.