In the last three months of 2010, banks, credit unions and other lenders made $12 billion of Small Business Administration-backed loans, the most in any quarter in the SBA's history and more than double the volume in any quarter over the last four years.

But the pace of lending has slowed considerably since — only $3 billion of loans have been approved since Oct. 1, according to the SBA — and now banking and business groups are urging Congress to do something about it.

Specifically, they are asking lawmakers to reinstate a program that will temporarily increase the size of the government's loan guarantee, eliminate fees for borrowers and streamline the application process. In a letter last week, more than 20 business groups — including the American Bankers Association, the Independent Community Bankers of America and the Financial Services Roundtable — said that similar incentives helped jump-start lending activity during the financial crisis and could do so again if Congress took action.

The $787 billion economic stimulus bill Congress passed in 2009 included a provision that used taxpayer funds to increase the size of the loan guarantee to 90% on SBA 7(a) loans and waived most fees associated with SBA loans. The program proved to be such a success that Congress extended it several times before finally letting it expire on Dec. 31, 2010.

"The federal government must act to help small businesses obtain the capital they need to meet their financial challenges," read the Nov. 14 letter, which was also signed by such business trade groups as the American Apparel and Footwear Association, the National Grocers Association and the National Association of Truckstop Owners. "As Congress reviews proposals which aim to increase lending to small businesses, we respectfully request that [it] consider enhancing and facilitating successful programs operated by the SBA,"

Typically, the SBA will offer a guarantee of 75% to 85%, depending on the size of the loan. At this point, no member of Congress has introduced legislation that would increase the threshold or provide other enhancements to SBA loan programs.

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