Thursday, April 8, 2010

SBA Recovery Act Lending Extended

President Barack Obama Friday signed legislation extending through April the U.S. Small Business Administration’s ability to provide enhancements in its two largest small business loan programs.



The enhancements, first made available under the American Recovery and Reinvestment Act (enacted Feb. 17, 2009) , include a higher guarantee on some SBA-backed loans and fee relief.


The SBA estimates the $40 million extension will support about $1.4 billion in small business lending.


"Thousands of small businesses across the country have taken advantage of these Recovery loan enhancements to get the capital they need during these tough economic times," SBA Administrator Karen Mills said in a statement. "The increased guarantee and reduced fees on SBA loans 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. As a result, average weekly loan approvals by SBA have climbed by 86% compared to the weekly average before passage of the Recovery Act. These programs have been successful in helping jump-start our economy, which is why we will continue to work with Congress on a longer extension of the increased guarantee and reduced fees. "


As part of the Recovery Act, SBA received $730 million to help small businesses, including $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.



The funds for these programs were exhausted on Nov. 23, 2009, and an additional $125 million was provided in December. Those funds were exhausted in late February, 2010, and an additional $60 million was provided subsequently. That funding was exhausted late Friday.
Under the new extension SBA may continue to waive loan fees and provide higher guarantee levels on 7(a) loans through April, 30, 2010, or until the funds provided under the bill are exhausted.


This extension does not affect other SBA Recovery Act programs, including the America’s Recovery Capital (ARC) loan program or the agency’s microloans. Recovery Act funding still remains available for both of those programs.

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