Small Business Owners: Government-Sponsored Loans Are Now Easier to Come By

Tough economic times mean lenders, of all varieties start tightening their belts. We’ve heard plenty of talk in the news about the struggles of current and potential homeowners to obtain new mortgage loans, but most other types of lending have also been severely reigned in as well. Small business loan funding, especially has been hard to come by. For those of you out there wondering what is going to happen to your business without a fresh infusion of cash soon, the federal government may have made it easier for you to get that much-needed money.

Announced in February of this year, the American Recovery and Reinvestment Act of 2009 is a measure that among other things give lenders incentives to start financing more small business projects. According to the Small Business Administration’s website , the government bill has given the SBA $730 million to do several specific tasks. These include:

• $375 million for temporarily eliminating fees on SBA-backed loans and raising SBA’s guarantee percentage on some loans to 90 percent. 
• $255 million for a new loan program to help small businesses meet existing debt payments
• $30 million for expanding SBA’s Microloan program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to microlenders
• $20 million for technology systems to streamline SBA’s lending and oversight processes

What all that means is that is now or will be easier to get government-backed small business loans. No fees means the loans will be more affordable as well.  Currently, SBA loans do not need to be secured for loan amounts between $5,000 and $50,000 and the interest rates start at 7.75 percent.

If you want to get in on this action, be careful not to be taken in by scammers. According to Jayant Row on the EduBook blog

“It is unfortunate that along with the stimulus package, a new business has taken root, in which these new entrepreneurs guarantee loans for your small business. They will offer you driblets of information all of which is freely available on the net, and even charge you for this information… Contact the SBA in your area or your local bank if it has a SBA section. You can get all this information, select the [program]  you want… and make all the applications and submit the required paperwork, so that you get the required loan.”

One Response to “Small Business Owners: Government-Sponsored Loans Are Now Easier to Come By”

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