Looking Ahead
Three SBA programs face closer scrutiny.
Three SBA programs face closer scrutiny.
Recent changes made by Congress to the Small Business
Administration's (SBA) leading lending programs can, depending
on the prism you view them through, either make the loans more
expensive or ensure their continued existence. At issue are the
7(a) and 504 guaranteed loan programs, plus the Small Business
Investment Company (SBIC) program.
Congress felt the three programs were costing the federal
government too much in the form of annual appropriations. The
appropriations were necessary because the SBA was having trouble
liquidating delinquent loans. That difficulty was a result of the
rapidly rising number of loans and the rapidly plummeting numbers
of SBA staff. For example, the 504 loan program set a record in
fiscal 1996, with 6,884 loans approved.
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The congressional Rx came in the form of the Small Business
Programs Improvement Act. Introduced by Rep. Jan Meyers (R-KS),
retiring chair of the House Committee on Small Business, it
includes an SBIC amendment written by her Senate counterpart, Sen.
Christopher Bond (R-MO).
The SBA's solution for the 7(a) program is to turn over
liquidation duties to banks. That won't affect small businesses
much, except those that had previously defaulted and got away with
it.
However, Congress did impose a series of new fees on borrowers,
lenders and others connected with the 504 and SBIC programs.
"These changes are crucial," says Rep. Meyers, "not
only to ensure the livelihood of a fundamental capital source for
small business but also to establish a better balance between
public and private program funding and to streamline liquidation
duties that the SBA clearly can no longer handle
efficiently."
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