SBA Loan Cap Is Lifted; More Money Now Available SBA said it has lifted the $750,000 cap and other restrictions on its 7(a) loan guarantee program, after President Bush signed legislation freeing up an additional $3 billion for the program. 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 by the House March 31 and by the Senate the next day. President Bush signed it April 5. SBA said the law increases the 7(a) program’s lending authority for the current fiscal year by up to one-third, to $12.7 billion. The program will guarantee loans up to $2 million and lenders would be able to make SBA Express loans of up to $2 million. Seventy-five percent of the amount of an Express loan will be guaranteed by the government, as is the case with other loans through the program. Previously, only 50% of Express loans were guaranteed. The legislation raises the maximum amount of the guarantee to $1.5 million, from the current $562,000, Rep. Manzullo said. SBA said piggyback loans, the practice of combining SBA loans with other financing, will 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 program. Lenders and borrowers will 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’s program authority though June 4 and extends all its lending programs 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)