Since the small-business provisions of the stimulus package expired at the end of May, U.S. Small Business Administration (SBA) lending has plummeted. In June, the SBA approved just $647 million in lending. This is down two-thirds from the $1.9 billion it approved in May.

This is unacceptable.

For months, NSBA has called on Congress to extend the stimulus provisions providing a 90 percent guarantee on SBA 7(a) loans and the eliminating the borrower fees on both 7(a) and 504 loans through all of 2010. Yet time and again, Congress has failed to act.

The SBA originally received $375 million to increase the guarantee on 7(a) loans to 90 percent and to reduce borrower fees on most 7(a) and 504 loans as part of the American Recovery and Reinvestment Act, which President Barack Obama signed into law on Feb. 17, 2009. This funding was exhausted on Nov. 23, 2009. In Dec. 2009, the SBA received an additional $125 million for these provisions. This funding jolt lasted until late February 2010. At that time, an additional $60 million was provided, which kept the provisions active through most of March. In late March, the SBA was authorized to use $40 million to further extend the provisions. In mid April, the provisions were extended through May 31, 2010.

This series of program lapses and short-term reauthorizations is gravely disappointing, given the demonstrable success of the small-business stimulus provisions. The SBA announced that it processed 16,558 7(a) loans in the second fiscal quarter of 2010, which was more than double the 8,205 loans it processed in the same quarter of 2009. In total, $3.7 billion in lending was extended to small-business owners in the quarter, more than twice as much as the $1.6 billion processed a year earlier.

While the Small Business Jobs Act of 2010 (H.R. 5297) that the U.S. House of Representatives approved on June 17 would extend the small-business provisions of the stimulus package through 2010, the U.S. Senate has yet to act on the legislation.

NSBA urges the Senate to quickly pass the Small Business Jobs Act of 2010, in its entirety. For more information on this legislation, please click here.