The SBA 7(a) loan program has reached its authorized ceiling of $18.75 billion for the fiscal year ending September 30, 2015 and therefore has shut down until the new fiscal year begins on October 1, 2015 or until Congress increases the authorization level. Even though the 7(a) program operates with zero subsidy from the federal government, Congress must still provide an authorization level each year. With a robust lending environment, the ceiling has been reached. On July 23, Ann Marie Mehlum, Associate Administrator for Capital Access, explained the closure:
“This notice is to inform all stakeholders and interested parties that the 7(a) program has reached its FY 2015 loan guaranty program limit. As a result, SBA is forced to suspend its 7(a) small business lending until the start of the new fiscal year on October 1, 2015, or until such time as the 7(a) loan authority is increased by Congress. All loan applications submitted through delegated or non-delegated authority as of noon (EDT) today will be processed as usual.
SBA continues to work closely with our partners in the House of Representatives and Senate to address this challenge. While a solution is not yet finalized, we are hopeful that Congress will soon increase the 7(a) program’s lending authority, ensuring that entrepreneurs and businesses can continue to rely on the program to secure the credit necessary to start or expand their business.
SBA recognizes that any lapse in the 7(a) loan program would impact thousands of entrepreneurs and businesses who rely on the program to overcome their inability to otherwise secure the credit necessary to start or expand their business. SBA is working with Congress to avoid a suspension by raising the statutory loan cap, but there can be no assurance as to the timing or likelihood of a legislative solution.”
“It’s sad that a self-funding program for small business owners who are creating most of the jobs in this country can’t get enough authorization to continue annually uninterrupted,” commented Michael D. Sneden, Executive Vice President at ValueXpress.