SBA this week is implementing two key provisions laid out in the Recovery Act. Our SBDC offices received information from our District SBA office that is surely good news not only for small business owners, but for our lenders too.
On Monday, March 16, President Obama announced that the US Treasury Department will commit up to $15 billion to get the small business lending market flowing again.
o These dollars will be focused primarily on community banks, credit unions and other small lenders – the local partners for so many of our Main Street businesses, small manufacturers, high-tech startups and others in the cities and towns across this country.
o Treasury’s effort, designed with significant input from SBA, will unlock the small business loan market by purchasing existing and new loans made by banks, freeing up more capital so these banks can restart lending to local small businesses.
Beginning today, the SBA will:
• Temporarily raise guarantees to up to 90 percent on SBA’s 7(a) loan program, through calendar year 2009, or until the funds are exhausted. This increase in guarantee levels will help provide banks with the greater confidence they need to extend credit during the current recession, will mean more capital available to small business owners around the country.
• Temporarily eliminate fees for borrowers on SBA 7(a) loans and for both borrowers and lenders on 504 Certified Development Company loans, through calendar year 2009, or until the funds are exhausted. This will mean more capital available to small businesses at a lower cost. The fee elimination is retroactive to February 17, the day the Recovery Act was signed. SBA is developing a mechanism for refunding fees paid on loans since then.
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