Congress Extends Small Business Loan Breaks
from the Grab-Your-Cash dept
This extension sets new guarantee levels at 90 percent on SBA 7(a) and 504 loans and reduces borrower fees for these loans as well. That is significantly more than the old guarantee of 75 percent. This is great news for small businesses. Banks are more likely to loan at a 90 percent guaranteed return than they would have before this and small businesses will be able to reduce their capital costs a bit.
But, as always with government programs, there are a couple of hitches. Loans that were taken before the extension was passed or that were funded under non-ARRA terms are not eligible for renegotiation. And since this program started, Congress has been slow in enacting the extensions -- recently, it's been a month-to-month process. This has caused the small business lending market to suffer from fitful starts and stops, which has made it difficult for many to plan appropriately for the loans they want. Congress needs to get its act together and extend the bill through the federal fiscal year (September 30, 2010) as proposed by the President and small business interest groups. Even so, applicants should be ready to deal with fast timelines, volumes of paperwork, and long wait times for approval from the SBA.
A 90 percent guarantee will certainly make many small business plans look like safer investments than they did even one year ago. The banks received their cash from Uncle Sam. Now's the time to get yours.