StartupJournal reports on changes that have taken place in the SBA loan program:
"Last Friday, despite last-ditch efforts in Congress, significant changes took effect in the nation's largest government loan program for entrepreneurs. As such, some business owners hoping to use the program may find themselves looking for new financing because they no longer qualify. Many who do qualify will pay higher fees for their loans. And in some cases, borrowers may find their local lenders, who also now face higher costs, less eager to participate in the program."
This may sound like a disaster for small business (especially as framed in many articles about this change), it is really part of an effort to stabilize this program and insulate it from the ups and downs of congressional funding. While this program has been important for many small businesses, it is a program that often suffers from policy changes and politics. These changes are actually an attempt to reduce the need for government subsidies and make the program self-funded.
"The 7(a) program would be operated via fees collected from lenders and borrowers, not a government appropriation. The SBA says such a move will streamline the program, reduce the burden on taxpayers, and stabilize funding."
Liberal politicians are screaming doom and gloom, but this is really a good change that will take this program out of the arena of governmental appropriations and move it more into the free market. Similar changes made in the Reagan administration proved to streamline and improve service for other SBA programs.
