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110th CONGRESS, LEGISLATIVE ISSUES A - Z

SMALL BUSINESS ADMINISTRATION (SBA)

ISSUE: The Small Business Administration’s (SBA) 7(a) Guaranteed Loan Program provides America’s small business owners with capital to start or expand their businesses. Over the last decade, this program has provided more than 500,000 loans and over $100 billion to our nation’s entrepreneurs. Today, the program provides over 30 percent of all long-term financing for small businesses. Its preservation is vital to ensuring that small businesses have access to the capital they need to grow and sustain their businesses. In FY2005, the Administration first moved to a zero subsidy for the 7(a) program, and implemented a higher fee structure. Viewed as a compromise, the SBA increased the maximum size of a 7(a) loan to $1.5 million.

CUNA POSITION: CUNA is a strong supporter of the 7(a) loan program, and has always advocated for the highest possible appropriation in order to keep reduced fees and make the program accessible to credit unions. CUNA advocates that the greater the number of available sources of credit to small business, the more likely a small business can secure credit and contribute to the nation’s economy. CUNA also supports legislative initiatives to reduce fees for the 7(a) program.

OPPOSING VIEWS: The Administration supports the zero subsidy with the intent for the program to become self-funding and not dependent upon appropriations.

IMPACT ON CREDIT UNIONS: With a significant increase in fees to lenders and borrowers, the zero-subsidy may force credit unions and other financial institutions out of the program.

STATUS/OUTLOOK: CUNA testified before the House Small Business Committee on March 8, 2007 (see testimony below). On June 28, 2007, the House of Representatives passed H.R. 2829, the Financial Services and General Government Appropriations Act for fiscal year 2008. The legislation provides $17.5 billion specifically for the 7(a) program in total loan volume, $218 million in business loan programs, and an $80 million subsidy to reduce fees for lenders and borrowers. On July 12, 2007, the Senate Appropriations Committee passed the House legislation. The bill is expected to receive a vote in the full Senate or be bundled into an omnibus appropriations bill.

For more information see “Credit Union Small Business Lending Act” under Legislative Issues A-Z.

CONTACTS: Phil Drager, 202-508-6710, pdrager@cuna.coop.

110th CONGRESS, LEGISLATIVE ISSUES A - Z

SMALL BUSINESS ADMINISTRATION (SBA)

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