The Small Business Administration's new cap on 7(a) loans has backfired, the agency's chief told a Senate panel Thursday.

To conserve limited funds, the SBA on May 5 imposed a $500,000 cap on 7(a) loans. But notice of the cap sparked a $1 billion lending rush in the three weeks before it kicked in, SBA Administrator Aida Alvarez testified before the Senate Small Business Committee.

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