With the Senate’s failure to approve before the August recess the Small Business Jobs Act, the lapse of the small-business provisions of the stimulus package will extend another month—at least.

As part of the American Recovery and Reinvestment Act, the U.S. Small Business Administration (SBA) originally received $375 million, in Feb. 2009, to increase the guarantee on 7(a) loans to 90 percent and to reduce borrower fees on most 7(a) and 504 loans

While the original funding for these provisions was exhausted in Nov. 2009, additional funding was appropriated at several points over the next year. (For more information on the timeline, please click here.

NSBA has urged Congress to extend these highly-effective provisions through the end of 2010. According to the SBA, 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.Unfortunately, Congress has not seen fit to extend the provisions since they last expired at the end of May 2010—and this failure has resulted in a dramatic decline in SBA lending.

In June, the SBA approved just $647 million in lending, down two-thirds from the $1.9 billion it approved in May. More than a thousand small businesses have delayed their loan applications, in the hope that the provisions would be refunded, and registered for the Recovery Loan Queue.

This disrupted funding no doubt is a detriment to the nation’s economic recovery, as the affected small firms delay planned expansions and new hiring and hold off on exploring new business opportunities.

NSBA urges the Senate, when it reconvenes in Sept., to quickly pass the Small Business Jobs Act of 2010—in its entirety—and re-reenergize SBA lending.