With more than two months left in its fiscal year, the SBA has approved more than $16.4 billion in loans through its flagship 7(a) lending program. This record pace, however, has its downside. The 7(a) program is authorized to do only $17.5 billion in loans this fiscal year. Once that cap is reached, the SBA won’t be able to approve any more 7(a) loans until a new fiscal year begins on October 1.
SBA officials, however, think they can avoid shutting down the 7(a) program. SBA Associate Administrator Steven Smits said it is going to be “really close” whether SBA 7(a) will exhaust its funding for the fiscal year. July SBA approvals totaled $15 billion. The fiscal 2011 authority is $17.5 billion. SBA is currently funding loans at $300 million per week. With nine weeks left in the fiscal year and absent a last-minute surge of funding, SBA 7(a) lending should not be interrupted for more than a few days. Calculated another way, SBA has funded 86% of its authority with 83% of the fiscal year remaining. However, SBA will be instituting 7(a) lending queues to help manage the process. Beginning in early September, loans to refinance debt will be placed in a funding queue. “SBA wants to allow new dollars and those loans that create jobs to be funded first,” said Smits. A queue of all SBA 7(a) loans will be instituted around September 15. This will allow SBA to manage funding on a daily basis. There will be no interruption of SBA 504 funding.
