NORTH BAY – The Small Business Administration has been working at increasing levels of lending since March of last year when the government rolled out a $730 million multi-faceted program to encourage borrowers to apply for and bankers to approve loans.
Initially, the program set aside $375 million specifically for temporary fee eliminations on SBA loans as well as an increase of guarantee limits from 75 percent to 90 percent.
Last month President Barack Obama signed legislation providing $80 million in additional funding to continue these enhancements. The enhancements were first made available under the American Recovery and Reinvestment Act.
“The expectation is that they will keep extending it though the end of the year,” said Michael Rice, senior vice president and small business lending manager at Circle Bank.
He said that since the first rollout, each month or two the administration has extended the program, but there have been lags in the funding when the money runs out before the end of the extension period.
The program has officially been extended through the end of the year, though at this point it is only funded through the end of May. The SBA estimates the $80 million will support about $2.8 billion in small business lending under the 7(a) and 504 programs.
“Small businesses across the country have been able to secure critical financing as a result of the recovery act loan provisions and the continued interim funding we’ve received for the program,” said SBA Administrator Karen Mills. “The increased guarantees and reduced fees on SBA loans have generated more than $25 billion in new loans to small business owners and brought more than 1,200 lenders back to SBA loan programs.”
She said the two quarters of the current fiscal year have been the best ever for the 7(a) program, with more than $7 billion in guaranteed loans.
“These programs have been successful in helping jump-start our economy, which is why we will continue to work with Congress on a longer term extension of the increased guarantee and reduced fees,” she said.