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House Blocks Increase in SBA Loan Fees

The House rejected the Bush administration’s proposal to raise fees on small business loans under SBA’s flagship 7(a) program.

The House voted to restore $79 million in funding for the 7(a) loan program, the same as in the current year. The amendment to the 2005 Commerce-Justice-State appropriations bill was sponsored by Small Business Committee Chairman Donald Manzullo (R-IL) and the committee’s ranking Democrat, Nydia Velazquez (NY).

The administration and the House Appropriations Committee had zeroed out funding for the program, requiring fee increases on borrowers and lenders.

Rep. Manzullo said the up-front fee for a $100,000 loan would double to $1,700 under the administration proposal. It would also increase annual fees paid by lenders.

The administration said the loan program should be self-supporting.

“Increasing fees on small business borrowers and lenders, particularly as interest rates are rising again, puts another barrier in access to capital and crimps our national economic recovery,” Manzullo said during House debate on the amendment. He said 7(a) loans account for 30% of all long-term loans for small businesses.

The administration and many House Republican leaders opposed the amendment. “This is a subsidy to put money into the bankers’ pockets,” declared Rep. Frank Wolf (R-VA), chairman of the Appropriations Subcommittee that wrote the bill.

Rep. Wolf sponsored an amendment to restore funding for SBA’s Microloan program, which the administration wanted to kill. The program makes loans to businesses with fewer than five employees. The House adopted the funding amendment by voice vote.

The House approved the appropriations bill, H.R. 4754, July 8 by a vote of 397 to 18. The bill provides funding to support up to $12.5 billion in 7(a) loans during 2005. The Senate has not yet considered the companion bill.


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