Local SBA official hopes loan program funding is restored soon

Wayne Bell acknowledged Friday that the Small Business Administration’s biggest lending program doesn’t have funding, but he expects it to be a temporary situation.

On Thursday, the SBA reached the $18.75 billion limit set by Congress on the amount of 7(a) loans it can guarantee in a fiscal year. There are a little more than two months to go before the fiscal year ends Sept. 30, and Congress must raise the 7(a) ceiling for the money to flow again.

Bell, Wichita district director for the SBA, said he expects congressional action soon.

That’s because the Senate voted Thursday night to raise the cap by $4.75 billion – to $23.5 billion – and the House is expected to do the same next week, Bell said.

Quick action, Bell said, should mean that Kansans looking to make 7(a) loans will likely feel little to no lag time in the loan application process.

“It’s still the same process,” Bell said. “It’s just the funds aren’t there to deliver SBA loans at the moment.”

Loans are being processed up until the point of approval, but will be on hold until the lending cap is increased, he said.

In the Wichita district, which covers 77 counties in central and western Kansas, the average loan application takes about two weeks, Bell said. Borrowers most affected are those who submitted their application last week or two weeks ago.

Bell encouraged people to apply for loans as banks are continuing to process applications. Those submitting applications this week or in the future will not feel a significant impact.

The cap applies to the 7(a) program, which guarantees loans for starting or buying a company, purchasing or improving property or equipment, or running a company’s day-to-day operations.

The SBA Express program, which promises quick approval, and Veterans Advantage loans, designed for veterans and their spouses, are also on hold because they are part of the 7(a) program.

The SBA’s 504 loan program and the Microloan program are unaffected.

Bell was unable to say how many Wichita district loans were in limbo, but he did say the district processes approximately 10 to 15 loans each month.

The SBA approved more than 52,000 loans in fiscal year 2014 nationwide. Before the SBA reached its cap, Congress raised the ceiling last September to $19.19 billion.

Reaching the ceiling was no surprise. SBA Administrator Maria Contreras-Sweet warned members of Congress in June that the 7(a) program had reached 75 percent of its lending authority in the first three quarters of the fiscal year, and that the fourth quarter tends to be the program’s busiest time.

With a little more than two months until the end of the fiscal year on Sept. 30, raising the cap this early – and by this much – points to a strong lending economy, Bell said.

“It’s an indicator that lending is somewhat healthy,” Bell said. “Cash is accessible and there’s a good amount of business activity.”

Contributing: Associated Press

This story was originally published July 24, 2015 at 3:58 PM with the headline "Local SBA official hopes loan program funding is restored soon."