Small Business Administration Fully Funded…For Now
Mar 3rd, 2010 @ 9:49 PM by Amber Nelson
Very recently the Small Business Association announced that it had run out of funding for its special economic relief loan programs. That left plenty of small business owners in the lurch when it came to financing. Fortunately for those, and thousands of others, the Senate passed an unemployment benefits bill that will include extra money for the SBA.
As part of the Recovery Act last year, the SBA has been offering loans with guarantees of up to 90 percent and a waive on its usual fees. These incentives have been instrumental in keeping the small business lending industry alive during the financial crisis. The SBA has the approval to make these exceptions (normally they only guarantee up to 85 percent of small loans and 75 percent of large ones) through the end of September 2010, but because of pressing demand their funding had already run out as of February. Now with the passing of this latest extension bill, the SBA will have a renewed reservoir of $60 million to pay for the program’s subsidies. The trouble is that that amount will only cover the expenses for one more month, not all six months until September. As of today, the SBA has 520 loan applications on hold that are worth roughly $206 million.
There may very well need to be one or several more extensions to keep the program fully funded and able to help small businesses get the loans they need. With all the aid the government is handing out in other sectors to avoid more pain in the economy, I think it’s fairly likely that those extensions will take place.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.
unemployment is tough..glad I have a job