Lenders are advocating for the permanent expansion of Small Business Administration (SBA) loan caps to meet the growing capital needs of small businesses. This push comes in response to increased demand for larger-scale financing, particularly in sectors like manufacturing.
Legislative Developments: Doubling Loan Limits for Manufacturers
A significant legislative move in this direction is the introduction of the “Made in America Manufacturing Finance Act” by Senator Joni Ernst (R-IA) and Congressman Roger Williams (R-TX). This bipartisan bill proposes to double the individual loan limits for SBA 7(a) and 504 programs from $5 million to $10 million, specifically targeting small manufacturers. The aim is to bolster domestic manufacturing capabilities and strengthen supply chains.
SBA Administrator Kelly Loeffler has expressed strong support for this legislation, highlighting that nearly 99% of American manufacturers are small businesses. She emphasized that the increased loan limits would provide these businesses with the necessary capital to expand, hire, and compete effectively. Fox Business+3Small Business Administration+3Small Business Administration+3Fox Business+2Small Business Administration+2socrates | CRA Learning Center | findCRA+2
Lenders’ Perspective: A Step Toward Broader Expansion
While the proposed legislation focuses on manufacturing, lenders view it as a potential precedent for broader increases in SBA loan caps across various industries. The Small Business & Entrepreneurship Council has endorsed the bill, noting that higher loan limits are essential for small businesses to grow, innovate, and contribute to economic development.
Lenders argue that the current $5 million cap on SBA loans is insufficient for many small businesses seeking to undertake significant projects or expansions. They believe that permanently raising the loan limits would better align with the evolving financial needs of small enterprises.
SBA’s Response: Policy Reforms and Program Enhancements
In addition to legislative efforts, the SBA has implemented policy reforms to strengthen its lending programs. Effective June 1, 2025, the SBA reinstated traditional underwriting standards, replacing the previous “Do What You Do” approach. This move aims to reduce default rates and ensure the financial integrity of SBA-backed loans. CommercialLendingX
Furthermore, the SBA has increased the maximum loan amount for the 7(a) program from $5 million to $6.5 million, reflecting inflation adjustments and growing capital needs among small businesses. SB-FI
The Path Forward: Balancing Access and Risk
As lenders continue to advocate for higher SBA loan caps, the focus remains on balancing increased access to capital with prudent risk management. Ensuring that small businesses have the necessary resources to thrive, while maintaining the integrity of the SBA loan programs, is a shared goal among stakeholders.
The ongoing discussions and policy developments signal a commitment to adapting SBA lending frameworks to better serve the dynamic needs of small businesses in today’s economy.
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