President Barack Obama recently signed legislation extending through April the U.S. Small Business Administration's ability to provide enhancements in its two largest small business loan programs. The enhancements, first made available under the American Recovery and Reinvestment Act (ARRA), include a higher guarantee on some SBA-backed loans and fee relief. The SBA estimates the $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 ARRA loan enhancements to get the capital they need during these tough economic times," says Karen Mills, SBA administrator. "The increased guarantee and reduced fees on SBA loans helped put more than $23 billion into the hands of small business owners and brought more than 1,100 lenders back to SBA loan programs. As a result, average weekly loan approvals by SBA have climbed by 86% compared to the weekly average before passage of ARRA. 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.
As part of ARRA, enacted on Feb. 17, 2009, SBA received $730 million to help small businesses, including $375 million to increase the SBA guarantee on 7(a) loans to 90% and to waive borrower fees on most 7(a) and 504 loans. The funds for these programs were exhausted on Nov. 23, 2009, and an additional $125 million was provided in December. Those funds were exhausted in late February 2010.
Under the new extension, SBA may continue to waive loan fees and provide higher guarantee levels on 7(a) loans through April 30, 2010, or until the funds provided under the bill are exhausted.