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SBA SETS LIMIT ON ITS 7(A) LOAN

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Due to an unprecedented demand for small business loans, the Small Business Administration has set maximum loan limits of $500,000 on the popular 7 loan guaranty program.

The change will allow the agency to serve a larger number of small businesses, according to Stan Nakano, Salt Lake District director for SBA.The limit doesn't affect export working capital loans, greenline asset-based revolving line of credit loans, defense conversion loans and pollution control loans. It also doesn't impact the 504 loan guaranty program, which is used for long-term fixed-asset and real-estate financing.

Nakano said the action is being taken to ensure that adequate funding is available through the remainder of the fiscal year, which began Oct. 1. The agency's loan guaranty volume is running at an average rate of $38 million per day, the highest demand in history.

The volume is expected to result in a demand for more than the $9 billion allocated by Congress. Without the changes, SBA's loan guarantees would be limited to about $7.8 billion nationally, said SBA administrator Phil Lader.

Nakano said his office made 539 loans last year, a 27 percent increase over the previous fiscal year.