As Small Business Loans Multiply Congress Extends Stimulus Packages Aid To Small Business Administration

By Marilyn Bowden
Congress has given The Small Business Administration, or SBA, another reprieve, allowing the agency to continue to offer enhancements first introduced under the American Recovery & Reinvestment Act through the end of April.

The Recovery Act, enacted Feb. 17, 2009, infused $375 million into SBA coffers to increase the guarantee on its 7(a) loans to 90% and to waive borrower fees on most 7(a) and 504 loans.

The 7(a) Loan Program provides financing for general business purposes; 504 loans cover long-term, fixed-rate financing to acquire fixed assets such as real estate or equipment.

The funds for these programs were exhausted in late November, said national SBA spokesperson Mike Stamler, and an additional $125 million was provided in December.

Those funds were used up by late February, but Congress came through with an additional $60 million to fund the program through March.

Once again, the funds didn’t last the month, but a new, $40 million extension was authorized in Washington to carry the program through April 30.

Despite these diminishing allocations, National SBA Administrator Karen Mills said she hopes for further funding to keep the enhancements going.

"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," she said in a media bulletin. "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."

She said average weekly loan approvals by the SBA have climbed by 86% compared to the weekly average before passage of the Recovery Act.

Nancy Rackear, public information officer at the SBA’s South Florida District Office, said interest in both 7(a) and 504 loan programs continues to be strong, "and the Recovery Act provisions have played a big part in the upward trend in loan volume."

A survey of 7(a) loans made in Miami-Dade from fiscal October-March 2009 and the same period of fiscal 2010 show consistently higher activity, though March 2010 numbers were comparatively low.

"We’re not reading anything into these numbers," Ms. Rackear said. "We don’t yet have district numbers for March, but overall numbers are up over last year and certainly over the year before."

Each of the three new cash infusions has come after a period when funds dried up, and borrowers had to be placed in a recovery loan queue until the money arrived.

"From the data we have, we don’t really know what the impact is of this stopping and starting," Ms. Rackear said. "It would be helpful for us as an agency if we had a commitment from Congress that these provisions would be in place through the end of the year."

Ms. Mills said the SBA continues to encourage Congress not only to extend the enhancements but to act on other proposals President Obama has put forward, "including higher SBA loan limits and refinancing for commercial property mortgages to help thousands of small businesses avoid potential foreclosure." Advertisement