Small Business Administration's 7(a) loan guaranty program restored
The AVMA and other members of the Small Business Access to Capital Coalition recently claimed a legislative victory by restoring a business loan guaranty program that has been vital to the prosperity of veterinarians.
Unprecedented demand from small businesses seeking Small Business Administration 7(a) loans during 2003 resulted in the SBA placing restrictions on loan availability. Early in 2004, the agency set a cap of $750,000 on SBA-guarantied loans and withdrew the option of being able to piggyback loans by combining commercial loans with government-backed loans. As the year progressed, the loan guarantee was lowered further to a maximum of $562,000. The ability of veterinarians to fulfill their dreams of starting or expanding their practices was greatly hindered by these restrictions.
Working through the U.S. Chamber of Commerce, the AVMA and other coalition members offered a legislative solution to Congress. The result was the passage of H.R. 4062 by the House of Representatives on March 31, 2004, and by the Senate on April 1. President Bush signed Public Law 108-217 on April 4. This newly enacted legislation will increase the loan guarantee limit to $1.5 million and restore the ability to piggyback commercial loans to a gross loan limit of $2 million.
This is a temporary fix for the funding problem and the law will expire Sept. 30, 2004. It is hoped that a more permanent solution to funding those loans can be achieved before then. The additional loan authority granted to the SBA through this law is gained by a host of fee adjustments, primarily paid by lenders.
Contact Dr. Ray Stock at the AVMA Governmental Relations Division, (800) 321-1473, Ext. 3204, or firstname.lastname@example.org.