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WASHINGTON -- The U.S. Small Business Administration said it reached the $18.75 billion cap for its main loan guarantee program on Thursday, forcing it to halt the funding of new loans with more than two months left in the fiscal year.
SBA spokesman Miguel Ayala said the capacity for fiscal 2015 was exceeded by stronger-than-anticipated demand for the government-guaranteed 7(a) program loans made by banks to small businesses.
As the agency neared the cap, lenders submitted a crush of $3 billion in loan applications already in July, including $1.7 billion this week alone. The July figure is more than five times the agency's recent monthly volume, Ayala said.
The strong demand, which has been building all year, is a sign of an improved economy in which small firms want to expand and need capital, particularly in poorer communities, Ayala said.
The agency's loan guarantee capacity would normally be reset under a new cap at the Oct. 1 start to the next fiscal year but a two-month halt in lending could slow job growth in the sector of the economy that creates the most net new jobs.
U.S. Senate Small Business Committee Chairman David Vitter, R-Louisiana, told SBA Administrator Maria Contreras-Sweet in a letter on Tuesday that he was working to attach an increase in the lending cap to various pieces of legislation now under consideration. These include a transportation funding bill and a customs enforcement measure.
House Small Business Committee Chairman Steve Chabot also "is looking at multiple viable options right now" for lifting the SBA lending cap, said the panel's spokeswoman.
Lifting the statutory cap would not require new funds to be appropriated, as the program sustains itself through fees paid for the guarantees.
"It would be inexcusable for Congress to leave out in the cold small firms looking to build a new facility or purchase equipment," said Rep. Nydia Velázquez of New York, the small business panel's top Democrat. She said it would be "legislative malpractice" not to extend the loan program through September.