Per NAGGL News Alert:
Federal budget released, provides for increased access to capital for nation’s small businesses through the SBA 7(a) program
President Obama’s FY 2014 budget contains positive news for the nation’s job-creating small businesses that will benefit from increased access to capital under SBA’s flagship 7(a) business loan program to start, build and grow their businesses. “Small business loan guarantees are
funded at levels above historical demand, but at a greatly reduced subsidy cost from the 2012
enacted level and the 2013 Budget level, largely due to the improving economic forecast and lower estimated loan defaults.” For the 7(a) program, the return to a zero subsidy rate removes the need to seek appropriations and allows a lowering of the ongoing lender fee to 52 basis points (.52 from .55) for FY 2014.
SBA Funding Highlights in FY 2014 Budget
- Provides $810 million for the SBA, a decrease of $109 million from the 2012 enacted level, due primarily to the decreased estimated subsidy cost of its 7(a) Business Loan Guarantee Program.
- To encourage economic growth and job creation, the Budget provides $112 million in subsidy for SBA’s business loan programs. This funding supports $17.5 billion in 7(a) loan guarantees (including $1.8 billion in revolving lines of credit that support $65 billion in total economic activity), which help small businesses operate and grow their businesses.
- Waives fees on 7(a) loans that are less than $150,000, where analysis suggests the largest credit gap exists and because small loans are important for underserved communities.
- Creates a single, streamlined application for all SBA 7(a) loan products,which will reduce the time and cost for lenders to process loans and encourage lenders to make more loans.Learn more about SBA ONE at the St Louis Conference Closing General Session!
Supports equity investments in underserved markets and helps innovative small businesses obtain early-stage financing, including increasing the total amount of financing available for Small Business Investment Companies.