SBA Head calls for increase to $10m loan limits. What are the implications?
🍩 SBA Head Kelly Loeffler calls for increase to $10m loan limits on SBA 7a and 504 loans. This would solve today's "Donut Hole" problem, which is:
A business owner with $250k - $1.5m of earnings can easily find a buyer who uses an SBA loan to acquire them. The current $5m cap is plenty for those deals.
A business owner with $3m+ of earnings can find a buyer who is using non-SBA debt.
But the "donut hole" in the middle (a business with ~$2m - $3m of earnings) has extremely few debt options today.
Increasing the SBA loan limits to $10m would solve the donut hole problem. Even better, making the loan limits automatically adjust with inflation would prevent it from happening again.
Changes to the loan cap require an act of Congress, but Loeffler believes this could happen as part of a Defense Authorization bill. Small business support tends to be bipartisan.
There are a huge number of other ripple effects and implications a change like this would have, curious which stick out to people? redacted