By John Reosti

Besieged by demands from lenders, borrowers, and lawmakers, the Small Business Administration restarted its flagship 7(a) loan program Wednesday but failed to address the funding issues that led to the shutdown announced a week earlier.

Specifically, SBA officials said there are no immediate plans to seek additional funding authority for the current fiscal year, despite soaring demand for 7(a) loans, and that new loans will still be capped at $750,000, down from the previous $2 million.

SBA Press Secretary Douglas Heye said late Tuesday that it has come up with enough money to fund another $467 million -- or about two weeks' worth -- of loans. Officials hope that Congress will pass its full-year budget in the meantime, so there will be no more disruptions, he said.

"We're hoping the Senate will take up our appropriation bill" as soon as it reconvenes on Jan. 20, Mr. Heye said. "Our full appropriation should be enough to keep the program running through" the end of this fiscal year.

Acknowledging that the SBA underestimated demand for this year, Mr. Heye said it would ask for more money for fiscal 2005, which will begin Oct. 1. But that assertion has done little to appease borrowers and lenders who are urging the SBA to find more funds now.

Paul Merski, the chief economist at the Independent Community Bankers of America in Washington, said the SBA should at least ask Congress for enough money to match the last fiscal year's funding level of $11.3 billion. That total included funding for $1.8 billion of loans that Congress had originally earmarked for a disaster-relief program following the Sept. 11 attacks but went unused.

Barring additional funding, the per-loan cap will almost certainly have to stay in place for the rest of the year, and the SBA might even have to lower it, Mr. Merski said. "The SBA still has a genuine funding problem, regardless of whether the 7(a) program is up and running and regardless of whether Congress passes its full-year budget."

On Jan. 7, the day the shutdown was announced, Mr. Heye said the SBA probably would not seek to supplement the $9.3 billion of funding authority it requested for this fiscal year.

But this week, with business owners, bankers, and even presidential candidates leaning heavily on it, the SBA refused to rule out an effort to increase funding. Mr. Heye said Tuesday it is considering a number of options, including "reprogramming" money from other parts of the agency's budget.

In a Jan. 8 letter, nine Democratic members of the Senate Small Business and Entrepreneurship Committee -- including three presidential candidates, Sens. John Kerry, John Edwards, and Joseph Lieberman -- urged the Bush administration to submit a supplemental funding application for this fiscal year and called for a minimum level of $13 billion for the next fiscal year.

The SBA said it was forced first to cap the size of 7(a) loans and then to suspend the program altogether because of an unprecedented surge in demand. It said it guaranteed $3.2 billion of loans during the first three months of this fiscal year, 39% more than it guaranteed a year earlier.

Mr. Merski said the SBA's explanation amounted to saying that it had to shut the program down because it was too successful.

"If it's a successful program and the demand is strong, why pull the rug out from under it?" he asked.

News of the program's resumption also failed to mollify congressional Democrats. On Wednesday, Rep. Nydia M. Velazquez, the ranking Democrat on the House Small Business Committee, asked Rep. Donald Manzullo, R-Ill., to hold a hearing on the shutdown as soon as Congress gets back in session.

"Instead of engaging the small-business community and attempting to determine the reasons for the increased demand for 7(a) loans, the Bush administration's response has been incoherent," Rep. Velazquez said.

The SBA had a number of loans larger than $750,000 in its pipeline when it shut the 7(a) program down. Mr. Heye said those applications could be resubmitted, but the loan amounts would have to be scaled back to $750,000 or less.