7(A) Program Restored


Following months of debate between congressional supporters of the Bush administration and bipartisan supporters of the 7(a) loan program, the House voted to restore funding to the Small Business Administration’s most popular program. In July, $79.1 million (matching 2003’s amount) was reallocated to the program after it ran out of money in January.

The Bush administration proposed the SBA support its costs by increasing fees to both borrowers and lenders. Opponents of that model charged that lenders would have opted out and borrowers would be left with few options. Tony Wilkinson, president and CEO of the National Association of Government Guaranteed Lenders Inc., explained that “as costs get too high, lenders will start to leave. And if borrowers have to pay too high a fee, they may just not borrow money and borrowers who are on the fringe may get priced right out of the program.”

Following his July appearance at the National Urban League’s conference, President Bush announced an initiative to “expand business ownership and entrepreneurship among minorities.” The proposal outlined that it will create an entrepreneurship network, provide outreach and incubation, and facilitate access to funding from federal programs, but made no mention of actual budgets or real numbers.

The passage of the House’s plan met fierce opposition because that money eats into other programs, including $33 million already planned to link FBI and CIA computers. Democratic legislators believe that the Bush administration’s zero-subsidy budget proposal contradicted its claim that it is a friend of small business. Rep. Nydia Velazquez (D-N.Y.) said, “If small business was truly a priority to them, then these critical programs would receive adequate funding.”


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