Sequestration is here and it looks like it will be hitting small businesses in an unexpected way: SBA Loans.

Kent Hoover at the Business Journal has a great article about how the cuts to the SBA may affect the SBA’s loan programs, including the 7(a) program for working capital. Hoover poses an interesting set of scenarios should loan demand exceed the SBA’s budget:

The SBA’s assumptions about lending this year may be correct, but what if demand exceeds expectations? If that happens, the SBA could be forced to cap the size of its loans, establish a priority list for loan applications, or otherwise ration out its limited dollars in August and/or September.

Anecdotally, demand for SBA’s loan programs here in the Twin Cities has been high. Many banks are jumping on board the SBA Express. Many Minnesota banks have been using the 7(a) and 504 programs to provide loans to companies that would otherwise be unbankable. The 7(a) program has been especially popular for those looking for accounts receivable financing.

It will be very interesting to see if businesses continue looking to the SBA loan programs this spring and summer to meet their working capital needs.