From the campaign trail to Capitol Hill small-business owners have heard the sweet whisperings of change over the past year. However, it seems that change cannot arrive soon enough as mounting economic conditions continue to worsen and place a stranglehold on the lifeblood of small businesses – capital. Recognizing the immediate need to open up capital to small businesses the United States Small Business Administration (SBA) has proposed two changes to its most basic and most used loan programs.

The first change SBA has proposed is allowing banks offering the 7(a) loans to use a rate other than the prime rate when making the loans. The agency also said loan pools sold on the secondary market could be offered at an average interest rate instead of requiring that all of the loans within a given pool have the same interest rate.
Ranking Member Olympia J. Snowe (R-Maine) of the Small Business and Entrepreneurship Committee praised the SBA for proposing the two regulatory changes.

"The SBA deserves tremendous credit for its innovative effort to eliminate and modify burdensome regulations to promote capital access," Snowe said. "At a time during which credit conditions remain tight and small businesses are having difficulty obtaining the financing dollars necessary to expand their operations, we must ensure regulations are properly tailored and do not stand in the way of job creation."

While Snowe praised the SBA for its actions the senator also had additional recommendations for the agency to consider, actions that would provide even more relief to smaller firms. Among the recommendations was allowing the guarantee portion of large loans to be broken up and sold in separate loan pools and that the agency's lending programs should be able to use an alternative size standard when determining a small business's loan eligibility.

On October 30 the SBA released sobering data showing that the number of loans it backed dropped by 30 percent in 2008 and the dollar value of the loans dropped by 13 percent.