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Several groups that include the banking sector and business organizations have written to Congress to ask for more funding for the Small Business Administration, reports Portfolio.com.  But it seems Congress will retain the current figure of $1.4 billion compared to $2.6 billion during the same period a year earlier.  The former are hoping that the lawmakers at least restore the available loans to the amount of the previous year.

More than 20 business groups urged Congress today to increase funding for the Small Business Administration and restore incentives that led to a record level of SBA lending last year.

The SBA approved a record $19.6 billion in government-backed loans through its flagship 7(a) program in fiscal 2011, which ended September 30. That was up from $12.5 billion the year before. Much of this lending occurred in the first quarter of fiscal 2011, when the Small Business Jobs Act provided additional funds that enabled the agency to increase its guarantee on 7(a) loans to 90 percent and waive fees on these loans. These breaks made the loans less risky to lenders and more affordable to borrowers.

Those breaks are gone—and they’re missed. So far this fiscal year, the SBA has approved $1.4 billion in 7(a) loans, compared with $2.6 billion during the same period a year earlier. This year’s total also is below the pace set two years ago, when these loan breaks were funded by the economic stimulus bill.

Twenty-one business groups, ranging from the American Apparel & Footwear Association to the Travel Goods Association, sent a letter to Congress today urging it to restore these SBA loan breaks.

“Small businesses are critical to the creation of jobs and innovation in the U.S., and we must ensure that qualified small businesses have access to financing so that aspiring entrepreneurs and existing small businesses can continue to play a prominent role in leading our country’s economic recovery,” the letter states. “The federal government must act to help small businesses obtain the capital they need to meet their financial challenges.”

Banking associations also signed the letter, which noted that a group of banks in September committed to increase their lending to small businesses by $20 billion over the next three years.

But, the letter added, “we know more work has to be done to make sure capital reaches the aspiring entrepreneurs and small business owners who need it. To that end, we encourage Congress to work with the private sector to create small business lending opportunities by pursuing policies with a proven track record of success”—i.e. SBA loan breaks.

This campaign to boost SBA funding may not yield immediate results, however. Congress appears set on punting decisions on SBA funding, as well as appropriations for most other agencies. It’s scheduled this week to pass a continuing resolution that will fund most agencies at current levels through December 16. That at least avoids a shutdown of the SBA and other agencies, since the current bill funding the government expires Friday.

But it does nothing to get SBA lending back to where it was.

Photo by what_upspandemonium