WASHINGTON - President Bush signed an appropriation bill this week giving the Small Business Administration an additional $1.45 billion in loan-guarantee authority.

That authority will permit the SBA to support loans to small businesses damaged by riots in Los Angeles and flooding in Chicago, as well as in economically depressed New England.

Since the New England Lending and Recovery Project was initiated this year, the SBA has guaranteed $38.4 million in loans to 128 businesses in the region.

Helping Creditworthy Firms

Rep. John J. LaFalce, D-N.Y., chairman of the House Small Business Committee, said the supplemental funding would help many businesses that have had trouble obtaining bank loans.

The SBA program, he said, "is a vitally important source of capital for small firms, particularly during these recessionary times when other sources such as bank loans are hard to come by."

"For a variety of reasons - tougher bank capital requirements, increased lender caution in the face of bank failures, and weak real estate prices - commercial lenders have not been meeting the credit needs of creditworthy small-business borrowers," said SBA Administrator Patricia Saiki.

"That's why [borrowers] have turned in record numbers to SBA," she added. The House gave final approval to the bill Thursday, and the President signed it Monday.

Disaster-Loan Increase

Besides increasing general business loan guarantees, the funding package finances up to $500 million in direct disaster loans and about $30 million more in loans under the SBA's new Microloan Demonstration Pilot Project.

Before the supplemental appropriation, the agency's resources sources for both disaster and general business lending had been stretched by riot damage in Los Angeles and soaring demand for SBA loan guarantees.

The bill "will enable us to continue our commitment to provide the maximum agency resources in the rebuilding of Los Angeles," said Oscar Wright, an SBA regional administrator.

John Galles, executive vice president of National Small Business United, said the legislation "shows that the federal government can be responsive at a time when banks have not been so responsive."

Still Looking to Banks

"The SBA lending will be filling a gap that hopefully will be replaced by banks in the near future," said Mr. Galles.

Rep. LaFalce has been seeking passage of the Small Business Credit Crunch Relief Act of 1992, which would increase budget authorization for the SBA's primary loan program by about $6 billion in fiscal years 1992 through 1994. The $1.45 billion increase is a partial funding of that goal.

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