IE 11 is not supported. For an optimal experience visit our site on another browser.

Feds shelve small business loan program

Small businesses will have their access to capital crimped by a government move suspending the biggest loan program for them as it runs short of money, a Democratic lawmaker said Wednesday.
/ Source: The Associated Press

Small businesses will have their access to capital crimped by a government move suspending the biggest loan program for them as it runs short of money, a Democratic lawmaker said Wednesday.

The move is "the Bush administration's latest attempts to gut this critical program," said Rep. Nydia Velazquez of New York, senior Democrat on the House Small Business Committee. "As the economy struggles to create jobs, now is not the time to cut off small businesses from access to capital."

The Small Business Administration, which administers the program of loan guarantees intended to help businesses that can't qualify for regular loans from banks, blames the holdup on Congress. Lawmakers have not passed a $373 billion spending bill for the budget year that started Oct. 1, which includes money for the SBA.

Like most federal agencies, the SBA has been functioning under a temporary authority at 2002 spending levels.

Businesses' loan requests coming into the agency have reached record levels _ some $45 million a day _ far exceeding the money available, SBA spokeswoman Sue Hensley said.

"Unfortunately, it's hindering us," she said. "We need to get a budget soon."

The strong loan demand led the agency last week to cap the maximum loan it would guarantee through the program at $750,000, down from $2 million.

Similar disputes over the loan program between lawmakers and the White House have occurred before, and are often politically colored.

In May 1997, for example, Sen. Christopher Bond, R-Mo., then chairman of the Senate Small Business Committee, accused the SBA in the Clinton administration of failing to inform Congress that the program was running out of money.