Since early last year the SBA has waived fees and offered banks guarantees up to 90% on small business loans. The Recovery Act and subsequent stimulus programs included many of these adjustments to spur the economy and growth of small business. The incentives were only to last through the end of February.
However, Congress recently passed a bill that will extend the benefits through the end of March. That’s right, only another 30 days. Why aren’t they extending it longer? It appears to be an oversight by Congress because they certainly aren’t worried about spending money these days.
The bill passed last Tuesday allocates another $60 million to fund the SBA program’s subsidies for another 30 days. The SBA said this week that they had 520 loan applications totaling $206 million on hold in its Recovery Loan Queue awaiting additional funding.
Prior to the Recovery Act loan incentives, the SBA guaranteed up to 85% of smaller loans and 75% of larger ones. The guarantee is to protect the lender if the small business owner fails to pay back the loan. In that case, the SBA will cover the balance up to the 85% or 75% amount. After March of this year, the 90% guarantee will revert back to the original 85% or 75% amounts.
If you are in need of a loan you may want to visit a local SBA lender this month. Their requirements for approving loans are likely to intensify in April. When the guarantee from the government decreases, requirements are likely to become stricter.
David Gass
Founder, Business Credit Services, Inc.
Earn Expert Advisor
Tags: sba, sba loan improvments, small business lending, small business loans