The Small Business Administration (SBA) has announced that government stimulus funds for two of its most popular lending programs has run out. No stimulus means fewer new SBA loans. This is not good news for small businesses who apply for SBA loans. This could leave a lot of struggling small businesses out in the cold this winter.
Reuters reports that loan volumes for small businesses could fall if the stimulus money is not replenished. $375 million has already been used to pump up the SBA's popular 7(a) and 504 lending programs.
The money was being used to aid in reducing fees on SBA backed loans and also guarantee the loans from 75%-90%. The money was able to save small businesses up to $60,000 in fees. It also served to tempt other lenders to grant credit to the small businesses as well as convince investors to invest in the securities market.
Jonathan Swain, assistant administrator for communications and public liaison for the SBA was quoted by Reuters as saying, "We are continuing to work with Congress on funds to continue these programs, which have helped engineer a turnaround in SBA lending following last year's credit crunch and resulted in more than 40,000 loans to small businesses during these tough economic times."
President Obama is attempting to ensure that small businesses can stay afloat because they are the main source of employment for many Americans. The lending programs have been extended until Feb. 16, 2010. He is looking to obtain $100 million dollars for the programs.
What Can You Do For Your Small Business?
In the meantime, the SBA has started up the Recovery Loan Queue in order to make sure that small businesses have all of their paperwork ready for the next wave of stimulus money.
If you are one of those small businesses who were depending on this stimulus, you can register with the Recovery Loan Queue. The SBA will process the loan applications in the order that they are received, so file for your business promptly.
For more information, please visit our Related Resources section.
Related Resources:
- Recovery Loan Queue (SBA)
- Small Business Loans: Getting the Lender's Approval (Findlaw)
- Applying for a Loan: Financial Documents to Give Your Lender (Findlaw)
