WASHINGTON - While President Clinton was taking part in Small Business Week celebrations earlier this month, bankers were worrying about the plight of the Small Business Administration's popular loan guarantee program.

The SBA guarantees up to 90% of individual loans that banks make to small businesses. The agency sets aside for its reserves about a nickel for every dollar in guaranteed loans.

But on April 28, the SBA ran out of money. It had spent the $191 million appropriated for fiscal 1993, which runs until Sept. 30, to back $3.6 billion in loans.

Still Processing Applications

Congress is holding up legislation for additional funding because it would increase the budget deficit.

The agency is still processing loan applications but is withholding formal approvals, an SBA spokesman said.

The hiatus is causing "small businesses to be hurt each day by their inability to grow and provide jobs," said Anthony R. Wilkinson, president of the National Association of Government Guaranteed Lenders Inc., a trade group for 500 banks that originate SBA loans.

Mr. Wilkinson, speaking at a meeting of the group in Washington this month, added that $30 million in SBA loan applications "is stacking up each day."

"It's really hurting us," said Kale B. Gaston, a manager of State Bank and Trust of Colorado Springs, which has $30 million of assets.

State Bank lent 25 small businesses a total of $4 million under the guarantee program last year. Mr. Gaston recently approved an $825,000 loan to a local manufacturer of high-tech theater lamps.

"Being a small bank, we couldn't have done it without the SBA guarantee," he said.

Kyle S. Stevenson, a loan representative with Virginia's Patriot National Bank of Reston, said the program enables his bank to provide long-term loans - up to 25 years - to start businesses such as pet shops and garages. it lent $6 million to 50 SBA-backed applicants last year.

The President's foundered stimulus package had set aside $141 million for the SBA to guarantee up to $2.6 billion in loans. But even that would have left,the SBA $800 million short of the $7 billion it hoped to guarantee this fiscal year.

Bankers, the SBA, and small - business owners contend that the guarantee program creates jobs and increases tax revenues.

Favorable Figures

A 1990 Price Waterhouse study showed that taxpayers' money is well spent. According to the SBA, the accounting firm compared,a sample of businesses propped up by SBA-guaranteed loans with similar businesses that received no assistance.

From 1985 to 1989, SBA recipients increased staffs by 167% and saw sales jump 300%, compared with zero employment growth and a 37% sales increase for nonrecipients. By 1989, the government had received $357 million in taxes against adjusted taxpayers' investment of $271 million, the SBA claims.

Last December the agency expended its quarterly funding. Relying on the $141 million of the stimulus package, the SBA resumed the program within two weeks.

The agency guaranteed $3.1 billion in loans to 12,969 businesses from Oct. 1 to March 31. Loans average $240,000 and usually mature after 11 years.

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