The Federal Government will remain committed to the Small Business Administration as a vehicle to help stimulate the economy and grow jobs as the SBA looks to be one of only a handful of Federal agencies that ends up with a bigger budget in 2013 than it had this past year. Under the latest proposal, SBA funding for loan guarantees to small businesses would increase from $210 million to $333 million in FY2013, an increase of nearly 60%.
If the Senate passes the proposed funding request in its current form, it could translate into as much as $16 billion in loans through the 7(a) lending program, a 15% increase over the $13.9 billion in 7(a) loans so far in 2012. The proposed funding would make 2013 the most robust year for 7(a) lending since 2010.
With lenders still working through the recent decline in property values, the SBA guarantees under the 7(a) program are an attractive option, especially for smaller community banks that typically wouldn’t make such loans without the SBA guarantee. In a time when competition for credit remains intense, the 7(a) loans supply a much needed source of capital for small business lending.