Administration Proposes 25% Cut for the SBA – Congress Disagrees
The Small Business Administration (SBA) has proposed several changes to its major lending programs. The White House recently released the Budget of the United States Government for Fiscal Year 2021. The budget requests $739 million in budget authority for Small Business Administration loan programs in the new fiscal year, a $243 million (25%) decrease from the 2020 enacted level.
However, due to the bipartisan insertion of an OMB SBA 7(a) subsidy accounting gimmick, the 2021 budget is expected to continue to meet the demand by borrowers and lenders for SBA loan products.
According to the White House, the FY 2021 budget will provide the SBA with $43 billion to assist small business owners in accessing affordable capital. “These products serve a variety of business needs, from funding general business operations, such as working capital and capital expenses, to fixed-asset financing for machinery and equipment, construction, and commercial real estate. They also provide the opportunity for small businesses to refinance existing loans.”
The message from the White House continues, “To ensure that the SBA can provide these services at the least cost to taxpayers, the budget proposes that the SBA set an upfront administrative fee across its business loan programs to levels necessary to offset a portion of the costs of providing this assistance.”
The decrease takes into consideration that 7(a) lending activity was down 11% last year and it is contingent on the pending GAO audit, which affects whether the SBA program will have a subsidy in 2021.
Despite the budget proposal, strong Congressional bipartisan support will ensure the SBA will receive the appropriations needed to continue to fund $43 billion for Main Street in FY 2021, with SBA 7(a) loan guarantees and SBA 504 funding to aid the nation’s 30 million small business owners and their partner lenders.
For more information about SBA 504 loans in Alabama, Florida or South Georgia, contact a Florida First Capital Loan Officer or email us at info@FloridaFirst.com. Phone: 850.681.3601 or toll-free at 800.504.LOAN.