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The National Association of Federal Credit Unions (NAFCU) is urging members of the House of Representnative leaders to act swiftly to raise the statutory cap on the Small Business Administration’s 7(a) business loan program, which hit its ceiling of $18.75 billion last Thursday. The SBA reported that due to stronger-than-anticipated demand for 7(a) loans, the program has run out of money with more than two months left in the current fiscal year.
In a letter last week to House Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA), NAFCU Vice President of Legislative Affairs Brad Thaler asked for quick action on legislation to raise the ceiling to $23.5 billion for fiscal 2015, which has already been approved by the Senate.
“The 7(a) loan program is important to credit unions and their members,” Thaler said, noting that it “helps credit unions provide vital capital to start-up and small and underserved businesses. If no action is taken, a valuable source for small business capital will be unavailable to those still fighting to recover from the financial crisis.”
Lifting the statutory cap would not require new funds to be appropriated because the program sustains itself through fees paid for the guarantees.
In February, NAFCU and SBA formalized a national partnership to encourage more credit unions to increase their lending to member-small businesses through SBA micro-loan programs. Each SBA-guaranteed loan dollar from a credit union is excluded from the credit union’s member business loan limit, allowing the credit union to make the most of its MBL authority.