Increased Lending Authority for Small Businesses

by Daniel Shackle

If your small business is looking for financing, but has been unable to acquire loans, you may be in luck.  On Monday July 27th the U.S. House of Representatives raised the Small Business Administration’s (SBA) lending authorization ceiling to $23.5 billion for the 7(a) loan guaranty program.

The SBA’s 7(a) loan program is designed for start-ups and existing small businesses.  The SBA will guarantee as much as 85% of loans up to $150,000 and 75% of loans between $150,000 and $5 million.  If you can qualify (a big if), these loans can be a valuable resource for many small businesses.  Loan proceeds can be used for long-term or short-term capital, revolving funds, or to purchase items such as equipment, machinery, furniture, fixtures, supplies, materials, real estate, land and buildings.  Additionally, a business can use the proceeds for new building construction, renovation an existing building, establishing a new business, acquiring a new business, expanding a current business, or refinancing existing business debt.

This is great news for small businesses, which are a major source of employment and economic development in the U.S.  The downside of 7(a) loans is the ability for start-ups or micro-businesses to qualify for the loan through a lender.  A traditional lender must approve the loan prior to acquiring backing from the SBA.  If the lender unilaterally determines your business does not have enough revenue, financial history, etc., you may not get approval.

But, all is not lost.  Contact Clements & Shackle today if your start-up or small business is in need of an injection of capital and we can work with you and the lender to determine if you qualify under the newly enriched SBA 7(a) program.