The Obama administration is strongly urging Capitol Hill to add new funds to a popular small-business loan program that is nearly out of money.
As part of the $787 billion fiscal stimulus package earlier this year, lawmakers included $375 million to support Small Business Administration (SBA) programs to spur lending through higher guarantees and reduced fees.
The administration credits the programs with helping to rejuvenate lending for small businesses. Loan volumes under the program had crashed during the financial crisis last fall and winter. But the programs have been so popular this year that they are running out of money several months early.
Supporters are now requesting a little more than $100 million to carry the program through mid-February 2010. The administration is working on a transition system so borrowers can still apply for the loan program.
“At a time when we are all focused on job creation, small businesses are the engine of economic growth in communities across the country and we are confident that members don’t want to go home to their districts for the holiday and inform them that there is no more funding for this vital program,” an administration official said on Friday.
According to the SBA, the program has supported nearly $15 billion in small business loans since the stimulus package was signed into law in February.
The push is part of the administration’s broader effort in recent weeks to help small businesses weather the bleak economy. Treasury Secretary Timothy Geithner and SBA Administrator Karen Mills held a forum on ways to help small businesses.
But the calls are running into a packed schedule on Capitol Hill, where lawmakers are working on overhauling healthcare and possibly adopting new measures before Christmas to boost the economy. Meanwhile, Republicans have stepped up their criticism of the stimulus package after the nation’s unemployment rate hit a 26-year high of 10.2 percent.
The administration and a range of private economists credit the stimulus package with blunting the impact of the recession. Specifying the exact number of jobs created or saved by $787 billion program has been a persistent challenge for the administration.
Neither the House nor the Senate has appropriated additional money for the SBA programs, but lawmakers in both chambers are starting to work on the issue.
“The higher guarantee and fee reductions have encouraged an increase in small business lending,” said Nydia Velasquez, chairwoman of the House Small Business Committee. “I will continue working with my colleagues to find a way to extend funding that supports these important initiatives.”
Sen. Mary Landrieu (D-La.), chairwoman of the Senate Small Business Committee, is also looking for ways to boost the program.
“The fact that the funding is already running out is a testament to the program’s success,” Landrieu said. “The Recovery Act allowed for $14 billion in loans to more than 37,000 small businesses nationwide. To ensure small businesses have access to the credit they need, I am working to increase the loan limits on SBA loans and am exploring options to extend the Recovery Act provisions.”
The push for more money has also found support among some financial lobbying groups.