Small business groups and lenders urged Congress to reinstate the 90 percent government guarantee and fee reductions on SBA loans.
The economic stimulus bill provided the SBA with $375 million to increase the loan guarantee on the agency’s flagship 7(a) business loans to 90 percent and reduce or eliminate fees on 7(a) loans and 504 loans, which primarily finance real estate. That money, however, has run out.
Beginning Nov. 23, borrowers and lenders faced a choice: They could be put on a waiting list to get the higher guarantee and lower fees on their loans if additional money becomes available; or they could apply for a regular SBA loan. The SBA normally guarantees 75 percent to 85 percent of the loan amount.
The higher guarantee helped bring 1,200 lenders back to the SBA’s loan programs, and the lower fees made the loans more affordable to borrowers. SBA lending, which had slowed to a crawl last fall and winter, rebounded as a result of these breaks. Through Nov. 20, the number of 7(a) loans approved by the SBA this fiscal year, which began Oct. 1, was up 80 percent over the same period a year earlier. Total dollar volume jumped 147 percent.
Realted Reading at Buffalo Business First: SBA seeks to extend higher 7(a) loan guarantee