SBA Delivers Double Whammy

Small business has been hit with a double-whammy from the U.S. Small Business Administration.

First came the announcement that the SBA's primary loan program -- 7(a) loans -- would be capped at $750,000 (USD). Previously the SBA was approving loans as high as $2 Million. That change is effective January 8, 2004.

Then came the recent announcement that the SBA has run out of money! All due to Congress's failure to pass a budget for the SBA before adjourning last month. The SBA has therefore temporarily suspended its 7(a) loan program. This suspension is expected to be lifted as soon as a budget is passed. Despite being temporary, the suspension is a blow to small business.

Small businesses seeking expansion funding and additional working capital suddenly have fewer options. This comes at a particularly bad time, just when the U.S. economy is poised for a strong upturn. As a result, small businesses may find themselves without the funds to hire staff, buy new equipment or take other actions to capitalize on the opportunities ahead.

This post originally appeared on the author's weblog at Small Business Trends.

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How to Get a Small Business Loan: A Banker Shows You Exactly What to Do to Get a Loan Bryan E. Milling Sourcebooks Trade March, 1998 $10.36 at Amazon.com

The Business Start-Up Kit: Everything You Need to Know About Starting and Growing Your Own Business Steven D. Strauss Dearborn Trade Publishing January, 2003 $13.97 at Amazon.com