See you in September.

That's the message Congress sent to small businesses looking for help in getting loans.

Before leaving Washington, D.C., for its August recess, Congress failed to complete action on legislation that would make Small Business Administration loans more available and provide community banks with up to $30 billion in cheap capital for use in making small-business loans. Chances of the Small Business Jobs Act being enacted before September ended when the Senate failed to resolve a procedural dispute on the legislation before the House recessed July 30.

This means SBA lenders will go at least another month without a 90 percent government guarantee on the agency's flagship 7(a) loans. That enhancement, an increase from the typical 75 percent guarantee, was created by the economic stimulus bill and expired June 1. The higher guarantee made SBA loans less risky for lenders.

Fee waivers on 7(a) loans and the SBA's 504 loans, which are used primarily to finance real estate, also expired June 1. These breaks made the loans more affordable for small businesses.

The higher guarantee and lower fees helped revitalize SBA lending after it cratered during the financial crisis of 2008. More than $200 million in 7(a) loans were being made each week before June 1. That weekly volume fell to below $100 million, on average, in June and remained under $130,000 in July.

Congress' failure to reinstate the 7(a) loan breaks means that SBA lending will remain depressed through this month and into September, said Tony Wilkinson, president and CEO of the National Association of Government Guaranteed Lenders. Plus, many of the 1,300 lenders that returned to SBA lending because of the higher guarantee and fee waivers "are beginning to question why," he said.

"They can't count on anything in Congress being done in a timely fashion," Wilkinson said.

Without money, ‘you're not going to hire'

The Senate bill also would increase the maximum size limits on SBA loans.

Tag Holley, who owns Bama Icee Distributors in Leeds, Ala., with his wife, was counting on that provision. The Holleys need a $3 million loan to buy additional machinery to grow their frozen-drink business. Despite healthy cash flow, the only loan they can get is an SBA-backed 7(a) loan, and the current limit on 7(a) loans is $2 million.

"All the banks are willing to loan, quite frankly, is what the government is willing to guarantee," Holley said.

A $3 million loan would enable Bama Icee Distributors to buy 420 additional Icee machines, which are placed in convenience stores and other locations.

"We're raring to go," he said. "We could easily expand by 10 to 15 workers in less than 12 months."

But, he added, "until you have money to grow your business, you're sure as heck not going to hire anybody."

‘Partisan wrangling' delays bill

Action on the bill was delayed in the Senate not because of opposition to the legislation itself, but because of disagreements between Democrats and Republicans over unrelated amendments to the bill. Most Republicans opposed the $30 billion small-business lending fund, contending it was another bank bailout. But two Republicans voted with Democrats to give this provision a filibuster-proof 60 votes when it was considered as a separate amendment.

Republicans, however, were united in blocking the Senate from moving forward on the entire bill July 29. They complained Democrats would not let them offer enough amendments to the bill.

"We're disappointed that partisan wrangling sidetracked a bill that clearly has bipartisan support," said Kyle Kempf, government affairs director of the National Small Business Association.

Kempf is optimistic that Congress will enact the legislation when it returns in September.

So is Paul Merski, senior vice president and chief economist for the Independent Community Bankers of America.

If Congress enacts the legislation in September, he said, community banks could start tapping the small-business loan fund sometime in the fourth quarter.

Both Kempf and Merski said the legislation will still be needed this fall, given the weakness of the economy and the difficulty small businesses are having getting loans. A recent NSBA survey of small-business owners found that 41 percent say they can't obtain adequate financing - the highest percentage in 17 years.

Small businesses are "the sector of our economy that's supposed to lead us out of recessions," Wilkinson said. If the small-business lending bill doesn't get enacted, "they're really not going to be in a position to do that," he said.