Longer extension hoped for in jobs bill, program has spurred lending

NORTH BAY – The fee waiver and higher guarantee percentage that rolled out last February for Small Business Administration loans was extended for the second time through the end of this month, and it is expected to be extended again through the end of the year.

As part of the Recovery Act, SBA received $730 million, which included $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to waive borrower fees on most 7(a) and 504 loans. The funds for these programs ran out on Nov. 23, and an additional $125 million was provided in December. Those funds ran out late February.

The SBA estimated that the additional $60 million that went into the extension through the end of March will support about $1.8 billion in small business lending.

SBA Administrator Karen Mills said, “These key loan programs have been successful in helping jump-start the economic recovery for America’s small businesses. The increased guarantee and reduced fees on SBA loans helped put almost $22 billion into the hands of small business owners and brought more than 1,100 lenders back to SBA loan programs.”

Mark Quinn, district director of the SBA in San Francisco, said the expectation is that the jobs bill will contain an extension to the end of the fiscal year at least.

He said as the program runs out of money and then gets more, as it has since it first was launched, the numbers go up and down.

“When it looks like the money will run out, people make applications. When it is there, they don’t feel like it is as much of a rush,” he said.

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“We are all crossing our fingers that it gets extended again,” said Sherrill Stockton, senior vice president and SBA manager at Exchange Bank. “This is really important. We really do have borrowers where we only approved it because of the 90 percent guarantee.”

Exchange Bank has made seven SBA loans for a total of $3.2 million this fiscal year, according to the SBA.

“It is crucial for the approval for many of these loans to get the 90 percent guarantee,” Ms. Stockton said.

Circle Bank has made 11 SBA loans totaling $2.5 million.

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“We are still seeing a lot of stress in the small business community, and these waivers and increased guarantees are helping us make more loans,” said Michael Rice, senior vice president of small business lending at Circle Bank.

Last year Circle Bank made seven loans for a total of $535,000.

Now, he said, “We are making loans both to existing businesses with two or three locations for real estate and also to businesses who are seeing opportunity for business acquisition as well.”

The SBA is committed to seeing another extension.

“We will continue working with the president and with Congress to move forward with proposals for a longer extension for these important program enhancements,” said Ms. Mills.