WASHINGTON - President Obama signed legislation March 24 that extends enhancements to two major lending programs of the U.S. Small Business Administration (SBA) through April.
First made available under the American Recovery & Reinvestment Act, the enhancements include higher guarantees on some SBA-backed loans and fee relief. The SBA says that the new $40 million extension will support about $1.4 billion in small-business lending.
"Thousands of small businesses across the country have taken advantage of these Recovery Loan enhancements to get the capital they need during tough economic times," says SBA administrator Karen Mills. "The increased guarantee and reduced fees on SBA loans helped put more than $23 billion into the hands of small-business owners."
Mills adds that the enhancements helped bring more than 1,100 lenders back to SBA loan programs, and the agency's weekly loan approvals have climbed 86% from levels seen before passage of the Recovery Act early last year.
"These programs have been successful in helping jump-start our economy, which is why we will continue to work with Congress on a longer extension of the increased guarantee and reduced fees," she says. "We continue to encourage Congress to act on other proposals the President has put forward, including higher SBA loan limits and refinancing for commercial property mortgages to help thousands of small businesses avoid potential foreclosure."
Passed in February 2009, the Recovery Act dedicated $730 million to SBA's small-business lending programs, including $375 million to increase guarantees on 7(a) loans to 90% and waive borrower fees on most 7(a) and 504 loans. Those funds were exhausted in November, but the provisions have now been extended with new funding three times.
Under the most recent extension, SBA can continue to waive loan fees and provide higher guarantee levels on 7(a) loans through April 30 or until the new funds are exhausted. Eligible small-business loan applicants and their lenders can join the Recovery Loan Queue for possible loan approval as funding becomes available. For more information, click here.