WASHINGTON - Sen. John F. Kerry (D-Mass.) today sent a letter to SBA Administrator Hector Barreto objecting to the Small Business Administration’s decision to immediately institute a “lending holiday” for the agency’s 7(a) loan program because it ran out of money.

“At a time when the country has already lost 3 million jobs, it is astonishing that this Administration would deny small businesses access to loans. Small businesses are the best way for our nation to create jobs and grow our economy,” said Kerry, Ranking Democrat on the Senate Committee on Small Business and Entrepreneurship.

Kerry added: “The Administration may spin this failure as a ‘lending holiday,’ but the truth is the SBA has rejected hundreds of small businesses seeking some $600 million in loans. It is appalling, inexcusable, and reckless that the Administration would arrogantly mismanage its largest loan program, one that creates 350,000 jobs a year, despite repeated warnings from Congress and the banking industry.”

In the letter, Kerry criticized the Administration for requesting inadequate program funding levels for the program year after year.

“Instead of taking action to avoid repeating past funding problems, in testimony before this Committee, the Administration has repeatedly criticized the industry’s projections as excessive and dismissed concerns about the program running out of money,” Kerry wrote. “Consequently, when the higher estimates are realized, Congress has been forced to bail out the Administration each year with additional appropriations and emergency legislation.”

To ensure that small businesses are able to get the loans they need, Kerry urged Administrator Barreto to exercise his discretion to transfer money from within the agency to fund this program immediately, and to do so without penalizing other programs. Kerry also urged the Administration to seek supplemental funding once Congress is in session so that the program can continue uninterrupted for the remainder of the fiscal year.

On January 6, 2004, the SBA notified members of Congress via email that the Administration was instituting the “lending holiday,” effective immediately because of budgetary constraints.

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