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