The stimulus provisions for U.S. Small Business Administration lending and small business are working. The 7(a) program is responsible for more than 10 percent of the jobs that have been created or retained by the stimulus funding.
However, the 7(a) program received less than one-half of 1 percent of the stimulus funds.
The recent confirmation by the Obama administration that the economic stimulus funds earmarked for the SBA’s 7(a) loan program have run out is bad news for small businesses and their employees. However, the depletion of the funds is also proof that the loan program was, and is, a critically important part of the nation’s efforts to recover from this deep recession. Small-business owners were able to have the credit needed to create and retain jobs.
SBA data show that 7(a) guaranteed loan volume has been steadily increasing since the February inception of the stimulus program. The weekly average of 7(a) loans in the fiscal year prior to the American Recovery and Reinvestment Act was $118 million compared to a weekly poststimulus average of $224 million.
The SBA reports that since the beginning of the stimulus program, the number of loans is up 66 percent, while the amount of money loaned is up 90 percent. SBA officials also report that the $1.9 billion in loans made in September was the largest monthly amount of credit extended since August 2007. According to the National Association of Government Lenders, that amount would have likely been exceeded in November had money been available, but now small businesses must go on a waiting list.
Congress must act quickly to extend the stimulus funding for 7(a) lending so that the momentum we have seen during the past few months can continue. Small businesses need this continued opportunity; America’s recovering economy deserves this support.
America’s small businesses still need access to affordable credit so they can continue to create the jobs that this nation so desperately needs. Small businesses need choices, and Congress has the ability to keep credit flowing.
It’s time to stop talking and time to start doing. It’s time for action. Making more credit available to small businesses is the lifeline for our local economies, and the fuel needed to keep our economic engine running at full speed.
Scott Hauge is president of Small Business California.