Rep. Velázquez Questions $10 Million 7A Business Loan Limit Increase

Concerns Regarding 7A Loan Limit Increase

• 🎯 Rep. Nydia Velázquez expresses concern over a proposed increase in the 7A business loan limit to $10 million, questioning the lack of evidence supporting this specific figure.
• 📊 SBA data indicates a greater demand for manufacturing loans of $1 million or less, with significantly fewer loans exceeding $3 million since 2023.
• ❓ The justification for the $10 million limit is unclear, appearing to be "plucked out of thin air" and not adequately adjusted for inflation.

Rising Default Rates and Program Integrity

• ⚠️ Velázquez highlights that defaults on 7A loans have increased annually for the last three years, currently standing at 3.7%.
• 📈 Manufacturers' 7A loans show the second-highest percentage of defaults within the program, raising alarms about financial risk.
• 💰 As a zero-subsidy program, rising defaults mean the SBA spends more taxpayer money to reimburse lenders, potentially threatening the program's self-sustainability and requiring additional congressional funding.

Potential Impact on Small Dollar Loans

• ⚖️ Increasing the 7A loan limit risks allowing larger loans to consume a disproportionate share of the lending authority.
• 📉 This could lead to fewer small-dollar loans being available to other small businesses.

Path Forward and Collaboration

• 🤝 Velázquez acknowledges the need for a conversation on loan limit adjustments, as they haven't been increased since 2010.
• ✅ She remains committed to working with colleagues to find a responsible agreement on raising loan limits for manufacturers, ensuring the program's integrity is maintained.
• 🗣️ Discussions are ongoing with Chairman Williams to strengthen the measure and ensure it is implemented responsibly.