SBA Loan Incentives Reauthorized for Another Month

On February 23 in our post “SBA Starts Waiting List for Small Businesses Seeking Loan Breaks,” we wrote about the Small Business Administration’s announcement that it had run out of money to fund its stimulus package small business loan incentives – 7(a) and loan fee reductions. After the advancement of a $15 billion jobs bill the following week in the Senate with no appropriation for the loan incentives, the future of these programs seemed to be doomed.

However on Monday, the Senate passed the temporary jobs bill, which includes a brief extension of the provisions for the Small Business Administration’s loan incentives. It reauthorizes the 90% guarantee on SBA loans through March 28, with an appropriation of $60 million to fund the incentives. On Tuesday, the legislation was signed into law by President Obama.

While the reauthorization may be a welcome reprieve for many small business owners who had been put on the SBA’s waiting list and may now have the opportunity to gain access to much needed capital, the fate of the SBA incentive programs past the end of the month is unclear.

By: Present Value

Tags: 7(a), economic stimulus package, loans, SBA, Small Business Administration, small business loan incentives
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SBA Starts Waiting List for Small Businesses Seeking Loan Breaks

On Friday, the Small Business Administration announced that it had just about run out of money for the small business loan incentives – 7(a) and loan fee reductions – enacted last year by the economic stimulus package, and that a waiting list will be established for those small businesses seeking credit should more money become available.

These incentives were designed to reduce the fees on loans to small businesses and offer a 90% guarantee to banks that make SBA loans, making loans less expensive for borrowers and less risky for lenders. The normal guarantee for the average 7(a) loan is 75%.

The original $375 million in funding set aside last year for these two measures initially ran out in November, so the SBA set up a waiting list. In December, when another $125 million was put toward keeping the programs running through February 2010, there were more than 1,000 businesses on the waiting list.

The Senate voted to advance a $15 billion job-creation package Monday, but the funds for another extension of the SBA loan incentives were stripped from the package prior to the vote. So as of now, it remains to be seen if those businesses on the SBA waiting list will receive their loans.

These SBA loan breaks revived SBA lending, and enabled small businesses to get access to capital that they had previously been unable to get. Because of the breaks, 7(a) lending is up by 90% since the stimulus plan was enacted despite the fact that other loan activity has declined. Small business groups and many lenders believe these incentives are key to economic recovery and are urging Congress to appropriate the funds to keep the program alive.

Present Value LLC is a certified appraisal company and provider of business valuation services.

By: Present Value

Tags: Business Valuation, economic stimulus package, present value, SBA, small business, small business loan incentives
Posted in Business Valuation, SBA, Small Business Administration, economic stimulus package, small business, small business loan incentives | No Comments »