$4.5 Billion in Small-Business Lending Now Available from SBA
President Obama signed the U.S. Department of Defense (DOD) appropriations bill on Saturday, Dec. 19 which included $125 million to continue through Feb. 28, 2010, the enhancements made possible through the American Recovery and Reinvestment Act (ARRA) to SBA’s two largest loan programs. The SBA estimates the additional funding will support $4.5 billion in small-business lending.
New approvals of loans with the higher guarantee and reduced fees made possible by ARRA are expected to begin by Dec. 28. Loan applications from borrowers who chose to be placed in the SBA’s Recovery Loan Queue will be funded first, followed by new loan approvals beginning on or before Dec. 28.
Said SBA administrator Karen Mills, “This administration and Congress recognize that these key programs were successful in helping jump-start the economic recovery for America’s small businesses.” Mills continued, “The increased guarantee and reduced fees on SBA loans helped put more than $16.5 billion in the hands of small-business owners and brought more than 1,200 lenders back to SBA loan programs. The extension of these programs through February is important to continuing our path toward recovery and will mean thousands more small-business owners have access to the credit they need.”
Mills added, “Just two weeks ago, President Obama laid out key aspects of his jobs plan, including significant ongoing support for small businesses. We will continue to work with Congress on moving those proposals forward, including extending these loan enhancements as the president has called for, to ensure that small-business owners have the tools they need to drive economic growth and create jobs in communities all across the country.”
As part of ARRA, SBA received $730 million, which included $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to waive borrower fees on most 7(a) and 504 loans.
SBA created the Recovery Loan Queue as part of its transition back to pre-ARRA lending on Nov. 23 because previously approved loans are sometimes canceled or never disbursed for a variety of reasons. Eligible small businesses, in consultation with their lender, could choose to be placed in the queue for possible approval of an ARRA loan if funding became available. Currently there are 1,069 loans totaling almost $530 million in the Recovery Loan Queue.
The extension included in the DOD bill authorizes the higher guarantee levels through Feb. 28, 2010.