- Key takeaway: After more than a year of advocacy, SBA is taking a concrete step toward boosting loan-size limits.
- Forward Look: Administrator Kelly Loeffler has approved a rule that doubles the agency's cumulative loan limit to $10 million.
- Expert quote: Higher loan-size limits are "fiscally responsible and, I think, economically necessary." – Ohio State Professor Walter Hill
The Small Business Administration has moved to increase the amount of government-backed financing available to entrepreneurs by allowing them to stack loans from the agency's two biggest programs on top of one another.
A new rule, unveiled recently by Administrator Kelly Loeffler and scheduled to take effect July 4, lets borrowers combine $5 million of capital from SBA's flagship 7(a) program with another $5 million of 504 credit.
The current cumulative loan limit is set at $5 million and has remained static since 2010.
"What has inflation done since 2010," TD Bank SBA Head Tom Pretty said. "That $5 million cap's inflation adjustment is $7.5 million or $8 million."
The rule comes as the Trump administration continues its effort to double the size limit for 7(a) loans tied to manufacturing projects to $10 million. Congressional action is required to modify 7(a)'s loan-size limit. The House of Representatives has passed a bill, the Made in America Manufacturing Finance Act, that does so, but companion legislation
Loeffler, however, possesses the authority to set cumulative loan limit policy on her own. Previously the cumulative limit was $5 million. She said she opted for the higher ceiling in large part to boost manufacturing, a key Trump objective.
Under 7(a), SBA guarantees loans up to $5 million made by private lenders to eligible small businesses. It has a long list of uses, including working capital, equipment, debt refinance and strategic acquisitions. The 504 program typically provides funding for real estate and heavy-equipment purchases. Its loans are also capped at $5 million. Though most businesses don't need $10 million or even $5 million, the new limit could help businesses such as restaurant franchises, corporate daycare and hotels.
Through June 2, a little more than 8 months into its 2026 fiscal year, SBA had approved $19.4 billion in 7(a) loans. It's approved 504 program loans totaling $4.6 billion.
"By doubling the combined loan limits … this administration is empowering job creators, particularly manufacturers, to invest in American workers, rebuild our industrial strength, and grow the small business economy," Loeffler said in a press release.
Bankers, economists and financial-service-industry trade groups have been pushing for expanded SBA size limits. They've voiced support for the Made in America Manufacturing Finance Act. They've also pushed for raising size limits across the board, which is seen as a more straightforward solution to businesses' growing capital needs than packaging multiple loans together.
Testifying before the Senate Committee on Small Business and Entrepreneurship on May 13 — five days before Loeffler announced she would boost SBA's cumulative loan limit — Walter Hill, emeritus professor of economic development at Ohio State University's Ohio Manufacturing Institute, called raising loan limits "fiscally responsible and, I think, economically necessary."
Pretty called the new $10 million cumulative loan cap "a positive step in the right direction," that would help a wide range of businesses, especially those in need of working capital along with cash for construction and equipment.
Still, the rule's impact goes only so far. Professional-services firms and other businesses that operate without significant investment in real estate or equipment likely won't benefit because they won't be able to use the 504. For them, structuring a large transaction, like an ownership change, "becomes difficult," Pretty told American Banker.
"It would definitely be helpful to raise the [7(a)] cap," he said. "Having more flexibility in the 7(a) program is a really good solution."
"There's been lots of discussion on Capitol Hill about potentially increasing the cap for 7(a) loans," Pretty added. "There are a lot of areas that could benefit."
