Legislation Needed To Establish Specific Loan Guarantee Limits for the Economic Development Administration

The business loan guarantee program of the Economic Development Administration (EDA) has operated for many years without specific statutory monetary limitations. Since its creation in 1965, EDA has guaranteed over $197 million in loans of which $131 million is outstanding as of spring 1978. Four of the unpaid loans, totaling $75 million, were made to one company which is experiencing financial difficulties. EDA does not have sufficient reserves available in the event of a default by that company. The fiscal 1979 Appropriation Act limits the amount of obligations for direct loans and guarantees to $75 million. Separate limits for loans and loan guarantees would strengthen congressional control as does the $75 million ceiling.