Online Update: Congress Passes SBA Loan "Fix" Both house of Congress have passed legislation that would free up an additional $3 billion for SBA’s 7(a) loan guarantee program and would lift the current $750,000 cap on those loans. The bill, H.R. 4062, sponsored by Small Business Committee Chairman Donald Manzullo (R-IL), and the committee’s ranking Democrat, Nydia Velazquez (NY), was adopted March 31 by the House and the Senate approved it the next day. SBA said President Bush is expected to sign it into law. SBA said the bill would increase the 7(a) program’s lending authority for this year by up to one-third, to $12.7 billion. The program would guarantee loans up to $2 million and lenders would be able to make SBA Express loans of up to $2 million. SBA Express is a program that allows expedited approval of applications, but only 50% of the loan amount is guaranteed by the government. Regular 7(a) loans are 75% guaranteed. The legislation would raise the maximum amount of the guarantee to $1.5 million, from the current $562,000, Rep. Manzullo said. Piggyback loans, the practice of combining SBA loans with other financing, would again be allowed. The 7(a) program was shut down for a week in January and SBA imposed the $750,000 cap and a ban on piggyback loans because it feared the program would run out of money. SBA said it will issue specific guidelines on piggyback loans that will allow them to become a consistent part of the loan program. Lenders and borrowers would pay slightly higher fees under the legislation. Lender groups have said they can accept the increases in return for the larger loan authority. H.R. 4062 also extends the SBA though June 4, and all the lending programs, including SBIC, 504 and the 7(a) through the end of the fiscal year. A three-year reauthorization of SBA programs has been held up by a dispute between two House committees over procurement matters. (SAA, 3/19)