There’s more bad news for small businesses seeking loans.

After last week’s news that many banks had cut their small business loan balances over the past six months by $10.5 billion (see the Business Record story), the Small Business Administration (SBA) said Monday that it has run out of the stimulus cash that helped boost its small business lending this year.

The SBA used up the $375 million Congress had allocated so that the agency could waive fees and boost guarantees on loans backed by its lending programs, according to CNNMoney.com.

The move was popular with banks, because the SBA would back loans they made to qualifying small businesses, and if the business defaulted on the loan, the government would pay back that portion of the loan. Normally the SBA charges banks for the guarantee, but it had removed the fee thanks to the stimulus money it had received.

Despite the stimulus money, the SBA backed only 44,221 7(a) loans – its flagship product — in 2009, down from 69,434 in 2008 and 99,606 in 2007. The total volume of those loans in 2009 was $9.29 billion, down from $12.67 billion in 2008 and $14.29 billion in 2007.

Although the SBA funding didn’t stop banks from slowing their lending to small businesses, the SBA said the situation would have been worse if not for the stimulus money, CNNMoney.com reported. In January, before the stimulus measure kicked in, the SBA backed $684.5 million in loans, but last week alone it backed more than $1 billion in loans.

The SBA knew the money was drying up, and alerted banks the funding would last into December, but last week told banks Nov. 23 would be the transition date. The agency would like to have Congress extend the measure through February.

Read a Business Record story about the SBA program from May.