March 29, 2010
The U.S. Small Business Administration will continue to provide enhancements on its two largest small business loan programs under the federal recovery act, thanks to an extension signed by President Barack Obama.
The reduced fees and increased guarantees under ARRA have helped put more than $23 billion into the hands of small business owners and brought more than 1,100 lenders back to SBA loan programs, say SBA officials. Loan approvals by the SBA have climbed by 86 percent, compared to the weekly average before ARRA was passed.
SBA officials are also urging Congress to act on other administration proposals, including raising the SBA loan limits from $2 million to $5 million and refinancing for commercial property mortgages.
As part of ARRA, which was enacted in February 2009, the SBA received $730 million to help small businesses, including $375 million to increase the SBA loan guarantee on 7(a) loans to 90 percent and to waive borrower fees on most 7(a) and 504 loans.
The funds for these programs ran out on Nov. 23. An additional $125 million was provided in December. Those funds were exhausted late last month and an additional $60 million was provided, but that ran out on March 26.
Under the new extension, SBA may continue to waive loan fees and provide higher guarantee levels on 7(a) loans through April 30, or until the new funds are exhausted.
When the funds provided for March ran out, the SBA reactivated its Recovery Loan Queue. Small business loan applicants, in consultation with their lenders, may choose to be placed in the queue for possible approval of a Recovery Act loan when funding becomes available.
However, loans not covered under the Recovery Act that were financed during the Loan Queue period cannot get a retroactive guarantee or fee relief. Loans that were funded under non-Recovery Act terms cannot be canceled and resubmitted to take advantage of the Recovery Act.
Recovery Act funding is still available for the America's Recovery Capital (ARC) loan program and the SBA's microloans.