WASHINGTON – The U.S. Senate on Friday passed a bill introduced by U.S. Sen. Olympia J. Snowe of Maine that would enable the Small Business Administration to increase the amount it can lend through a guaranteed loan program from $4.8 billion to $8.2 billion in fiscal year 2003.

The bill’s projected impact on small business lending should result in nearly 21,000 more loans to small firms – with the potential to support at least 103,690 new jobs. Moreover, this can be done by reducing the program’s credit subsidy rate and without increasing federal spending, according to Snowe.

“I am confident the small-business sector can help restart economic growth, provided that the necessary investment capital is available,” said Snowe. The senior senator will be the incoming chairwoman of the Senate Committee on Small Business and Entrepreneurship

Currently, the so-called 7(a) Program is operating at a reduced capacity from previous years, with the size of loans capped at $500,000. The shortfall in lending authority leaves many small firms nowhere to go for money to maintain or expand their operations in a slow economy

Each year, 40,000 or more small-business concerns that cannot obtain comparable credit elsewhere turn to the 7(a) program for critically needed financing.

The program’s credit subsidy rate would be reduced by using far more comprehensive data about individual borrowers and loans when forecasting anticipated defaults and establishing loan reserves to cover them.