Congress quietly doubles SBA loan limits, shifting default risk to taxpayers
H.R. 1893 — LIONs Act of 2025 · Filed by Shri Thanedar (D-MI) · 9 cosponsors · Introduced Mar 5, 2025 · Referred to committee
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What it does
This bill doubles the maximum loan amounts available through two Small Business Administration lending programs: the 7(a) loan program (from $3.75M to $7.5M guaranteed, with gross loan caps rising from $5M to $10M) and the development company loan program (from $5M to $10M). Larger small businesses can now borrow more through these federally-backed programs.
Why we flagged it
The bill's sole operative function is to increase maximum loan amounts in two existing SBA lending programs. It is a straightforward amendment to statutory caps with no hidden mechanisms or riders.
What the text implies
- Increased SBA default exposure: larger loans mean larger losses per default, potentially straining the SBA's reserve fund and increasing pressure for future appropriations or premium increases.
- Lender incentive shift: banks originating larger loans earn higher origination fees and interest income, creating incentive to push borrowers toward maximum loan amounts regardless of actual capital needs.
The full analysis lists 4 implications of this text.
Who stands to gain
commercial banks and SBA lenders (higher origination fees and interest income); larger small businesses within SBA eligibility (access to more capital); development companies operating SBA 502 programs