The owner of Prime Eco Fluids Inc. in Sugar Land put down earnest money on land and a building for expansion and relocation of his business, selling additives to construction and oil companies.
But Guzman's hard work was suddenly stymied on Jan. 6, when the Small Business Administration called an abrupt halt to loan approvals in the federal agency's flagship 7(a) lending program.
"We were in the middle of paperwork and ready to roll when the bank told me I couldn't get that money," says Guzman, who had planned to add seven new employees. "Suddenly, my whole business went dead because I was counting on that money."
While in the process of evaluating his options, Guzman got some good news when the suspension proved to be short-lived and the SBA resumed 7(a) lending activity on Jan. 14.
But Guzman and others left in lending limbo can't count on getting their money yet. Resumption of the 7(a) loan program last week was made possible when the SBA received congressional approval to tap $470 million carried over from the past fiscal year.
While local SBA lenders welcome the return to business afforded by the fresh infusion of funds, they also warn that the amount is insufficient to provide more than a stopgap solution to a problem that requires long-term attention.
Guzman is taking quick action to be one of the fortunate borrowers to secure a 7(a) loan in case the window of opportunity closes again.
"It's very encouraging that the program is back up and running," says Guzman. "I'm moving ahead as quick as lightning and meeting with the SBA as soon as possible, because I know they're going to be real busy."
A demanding halt
The SBA called the temporary halt to 7(a) loan approvals because demand was exceeding the amount of money available to support the government-guaranteed loans.
The suspension followed an earlier announcement of the SBA's plans to reduce the maximum size of 7(a) loans from $2 million to $750,000, effective Jan. 8.