Congress Extends SBA Loan Limit to a Record $23.5 Billion

On Monday, July 27, 2015, the U.S. House of Representatives approved a bill that reinstates the popular government backed Small Business Administration (SBA) lending program. The program had been suspended the week prior after reaching its $18.75 billion limit for the year for loan guarantees with more than two months left in the government’s fiscal calendar. An amendment was added to the bill that effectively lifts the SBA’s lending cap, resulting in its largest loan guarantee program yet, expanded to a record $23.5 billion. President Barack Obama signed the bill into law on Tuesday. More than 1,100 potential small business borrowers have had their submitted applications on hold since the limit was reached.

What this basically means is that small businesses are again able to access loans backed by the federal government, with small business lenders expected to be back in business by the end of the week. This specific type of SBA loan—called the 7(a) loan—is commonly used by small business owners to buy and operate companies, to purchase property and equipment, and to make general improvements.

It’s believed that the reason the agency has seen an influx of applications this year is because owners are willing to take on more risks (which would include loans), a marked shift from the major cutbacks taken during the recession and the years that followed. Industry experts suggest that this heavy demand is a strong sign of a strengthening economy and a rise in small business confidence. According to Tony Wilkinson, president of the industry trade group National Association of Government Guaranteed Lenders, “It’s a good economic sign that businesses are willing to borrow again.”

SBA loan activity has been up in recent years, but it hasn’t been as accelerated as it is this year. In 2014, the SBA approached the limit in September but Congress was able to raise the ceiling before that limit was reached.