SBA Loans Are Flowing Again -- For Now The Small Business Administration’s largest lending program is back in business, with new limits on the size of loans, but the agency acknowledges it may run out of money again before the end of the month. SBA shut down the 7(a) loan guarantee program Jan. 6, saying it had nearly exhausted the money provided by Congress in its continuing resolution. Congress had not passed the agency’s appropriation for fiscal 2004, which began Oct. 1. SBA resumed accepting loan applications Jan. 14 after the Office of Management and Budget freed up $470 million in additional lending authority. But the agency continued a $750,000 cap on loans that was imposed this month and prohibited the use of “piggybacking,” in which an SBA loan is used as part of a larger financing package. SBA spokesman Doug Heye said those restrictions were put in place because of the limited amount of money available. “We want to help as many small businesses as we can,” he said in an interview. He said no decision has been made on whether to lift the cap and the piggybacking restrictions after the 2004 appropriation is enacted. House Small Business Committee Chairman Donald Manzullo (R-IL) said he will work with the agency to reprogram money from other parts of its budget so that the cap can be lifted. Sen. Olympia Snowe (R-ME), chair of the Senate Small Business Committee, said SBA did not notify Congress before imposing the loan restrictions, as required by law. “This program is clearly crucial to the success of American small businesses, and central to our efforts to create more jobs for Americans,” she said. “The SBA should demonstrate a strong commitment to it.” SBA imposed a $500,000 loan cap for part of fiscal 2003. It said it wanted to encourage smaller loans to younger and smaller companies, because the agency believes those companies are most in need of government-guaranteed financing. By law, SBA is permitted to guarantee loans up to $2 million. SBA said the $470 million in new loan authority would not last until the end of the month if the demand for loans remains at recent high levels. The Senate was scheduled to take up the 2004 omnibus appropriations bill, which includes SBA funding, shortly after it returned to work Jan. 20; the House passed the bill in December. But critics charge that passage of 2004 funding won’t fix the program. The Bush administration asked for authority for $9.3 billion in 7(a) loans in fiscal 2004; industry groups estimate the demand will exceed $12 billion. The SBA spokesman, said loan volume surged by 40% in October, November and December, compared to previous months. He attributed the jump to the stronger economy. Sen. Snowe called on SBA to provide a written plan to address long-term funding and management problems with the program. Democratic members of the House Small Business Committee called for hearings on the 7(a) program. In a letter to President Bush, they wrote, “Most disturbing about this occurrence is throughout 2003 your administration repeatedly ignored signs that loan demand was exceeding SBA’s available funds and chose not to act.” SBA made no public announcement when it shut down the loan program Jan. 6; word came from members of Congress and the lending industry.