SBA shuts down 7(a) loan program on short notice

Earlier this week, the U.S. Small Business Administration suspended its Section 7(a) loan program, citing budgetary shortfalls and congressional delays in approving the budget for the fiscal year that started Oct. 1, 2003 (see my earlier post about the hidden cost of war). This action leaves hundreds of small businesses in limbo, pending approval of the $373 billion spending bill which includes money for the SBA support of the 7(a) loan program.

The SBA's decision has drawn fire from both Democrats and Republicans alike:

Sen. John F. Kerry (D-Mass.), ranking Democrat on the Senate Committee on Small Business and Entrepreneurship, sent a scathing letter to SBA Administrator Hector Barreto:

"At a time when the country has already lost 3 million jobs, it is astonishing that this Administration would deny small businesses access to loans," Kerry said in the letter. "Small businesses are the best way for our nation to create jobs and grow our economy."

Sen. Olympia J. Snowe (R-Maine), chair of the same committee, was equally critical, pointing out that this action is, to put it bluntly, illegal:

"On Dec. 23, 2003, the SBA provided notice to me, as Chair of the Senate Committee on Small Business & Entrepreneurship, of its intention to impose a 'cap' on individual loans in the SBA's 7(a) loan program as of Jan. 8, 2004. This notice was required by Section 7(a)(24) of the 'Small Business Act,' which provides that the SBA must notify the Committee at least 15 days before making any significant policy or administrative change affecting the operation of the loan program. The SBA's subsequent actions in shutting down the program around Jan. 5, 2004, or an earlier date clearly violate this statutory requirement."

Of course, in this writer's opinion, it's completely unfair to put all the blame on the SBA. What does Congress think is going to happen when you don't approve funding? And why don't we have the money to spur U.S. economic recovery? We could start with the $100 billion spent on the war in Iraq, $50 billion for homeland security, etc.

Ever see the movie "Dave"? It never ceases to amaze me that our federal government can't seem to master basic business concepts, like the fact that you can't continue to go into debt year after year, and that responsibility without authority never works.

Hey, Congress—quit beating up on the SBA! Sure, they should have let you know sooner, but you created an impossible situation for them. It's your mess—you fix it!