Sequestration will Cut SBA Lending Programs $902 Million

February 12, 2013

If Congress and the President are unable to reach a deal by March 1, sequestration cuts will affect the entire federal government. SBA’s slice will be $902 million according to The Business Journal’s Washington Bureau Chief, Kent Hoover.

We talked with Kent about his reporting.

Bob Coleman: Kent, the other thing I want to talk to you about, and I know you’re following very closely, is the sequestration issue. How’s that going to affect the Small Business Administration?

Kent Hoover: Well the latest estimate, and this is what’s funny and I’m still trying to get a straight answer from the SBA, the White House says it would reduce total SBA lending by $902 million dollars if sequestration goes into effect and stays into effect. Initially they said $550 million, you know a million here a million there, but $902 million dollars is a much bigger problem because the pace that particularly 7(a) lending is going, they’re going to hit their maximum level just at their current pace, and so if all of a sudden that maximum is knocked down by nearly a million dollars we could end up seeing a shut down or some sort of rationing.

Bob: Another lending holiday

Kent: Yeah, like in August or September, you know, if we’re coming up to the end of the fiscal year and they’ve run through all their money, then all of a sudden SBA loans are going to be hard if not impossible to get. There probably will be some sort of rationing. Again, if that happens it’s going to be another one of these cases of everybody kind of rushing to get their loans in before the money runs out.

Bob: Well we’ve seen that before.

Kent: Yes, we sure have.

Bob: The $900 million dollars – is that 7(a), 504, a combination?

Kent: Yes, that’s 7(a) and 504. And it’s not clear yet how it would be split between those two, but that’s what they told me. And it would be anywhere from 1,500 to 2,000 loans would not get funded that otherwise would get funded.

Bob: Well Kent, I don’t like the news, but I appreciate you talking to us. Kent Hoover, Washington Bureau.

Kent: I always enjoy it

Bob: out of Washington, DC. Thanks Kent.

Kent: Thanks Bob

See Kent’s original reporting here.