Smart Borrower Blog

SBA Stimulus Money Runs Out for a Second Time

Feb 23rd, 2010 @ 5:25 AM by Debbie Dragon

Once again, the Small Business Association (SBA) is reporting that government funding has run out for two of their lending programs. Last year the government in an effort to help small businesses, and in hopes of simulating the downed economy, encouraged lenders that issue SBA loans to make more funding available to small businesses. Government funds were made available to reduce SBA loan fees and to offer a 90 percent guarantee to banks that made the loans. The original stimulus package of $375 million dollars ran out last November. Additional funding was then released to continue the program in the amount of $125 million dollars. That money for small business loans has once again been used up, faster than previously anticipated.

Last week SBA Administrator Karen Mills issued a statement where she let it be known that funding, “will be used faster than expected.” She went on to say that “loan volume has surged since earlier this week.”

SBA loan lending has increased in high numbers since the stimulus money was released. The increase has been so great the SBA has reported weekly loan volume has been up by as much as 90 percent since the stimulus money was released to lenders. In the last quarter the SBA backed 37 percent more loans than it did just a short year ago, during the same time period.

Small businesses have struggled with the tumbled economy and many have not been able to get funding they need to run productive businesses. This is especially true of businesses looking for lending through banks and other traditional lenders. The Obama Administration has been public about how small businesses are struggling and has fought to help them, making available stimulus money.

The question now is, will more stimulus funds be released to continue the incentives for banks to issue SBA funded loans? Small business groups around the country are making every effort they can to ensure funding continues. About 80 small business groups are using a letter campaign, urging senators to continue the SBA funding stimulus program.

If this funding was to disappear, SBA loan fees would return to previous amounts and only be guaranteed at 75 percent. This would leave a lot of small business owners with dwindled options and money they need to survive unavailable.

About Debbie Dragon
Debbie Dragon is a full time freelance writer and the co-owner of

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