Senate Proposes Adding Funds to 7(a); Cap Still In Place

The Senate recently proposed adding $1.2 billion to the 7(a) program by reinvesting unused money from the Supplementary Terrorist Activity Relief (STAR) fund offered through SBA. The House is expected to follow suit but the $500,000 7(a) loan cap remains in place.

The Senate amendment, sponsored by Senator John Kerry (D-Ma) and passed last month, would authorize the reprogramming of any unused STAR funding into the 7(a) loan program. The STAR program was developed to aid small business affected by the terrorist attacks on 9/11. The program ended January 10.

These new funds, combined with $3.4 billion the Senate added earlier by reducing the program’s subsidy rate, would enable SBA to approve $9.4 billion in 7(a) loans this year instead of $4.8 billion, the amount requested by the 2003 Bush budget.

Though the House is expected to follow suit and pass this legislation, SBA’s 7(a) loan cap remains at $500,000 for the foreseeable future. In a teleconference briefing last week, SBA Administrator Hector V. Barreto reaffirmed his position that SBA wants to steer larger loans for real estate and equipment to the 504 program.