New approvals of eligible loans with the higher guarantee and reduced fees made possible by the Recovery Act are expected to resume March 10. Loan applications from borrowers in SBAâs Recovery Loan Queue will be funded first, followed by new loan applications.
SBA Administrator Karen Mills said the key loan programs successfully helped jump-start the economic recovery for small businesses in the United States.
âThe increased guarantee and reduced fees on SBA loans helped put almost $22 billion into the hands of small-business owners and brought more than 1,100 lenders back to SBA loan programs,” Mills said. “As a result, average weekly loan approvals by SBA have climbed by 87 percent compared to the weekly average before passage of the Recovery Act.”
As part of the Recovery Act, SBA received $730 million, which included $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to waive borrower fees on most 7(a) and 504 loans. The funds for these programs were exhausted Nov. 23, and an additional $125 million was provided in December. Those funds were exhausted in late February.
SBA has implemented the Recovery Loan Queue twice before as part of its temporary transitions back to pre-Recovery Act lending. Eligible small businesses, in consultation with their lender, could choose to be placed in the queue for possible approval of a Recovery Act loan if funding became available from loans canceled for a variety of reasons.
The extension signed by Obama authorizes the higher guarantee levels through March 28, 2010, for 7(a) loans. The fee relief is available until the additional funding is exhausted or the end of the fiscal year Sept. 30, whichever comes first. As was the case in November and again in February, SBA is prepared to transition into a queue system as the funds start to wind down to ensure the maximum simulative effect of the programs and disbursement of funds.
For non-Recovery Act 7(a) or 504 loans already funded during the transition period, this extension does not provide a retroactive guarantee or waived fees. Loans that were funded under non-Recovery Act terms cannot be canceled and resubmitted to take advantage of the Recovery Act extension provisions. This extension does not affect other SBA Recovery Act programs, including the Americaâs Recovery Capital loan program or the agencyâs microloans. Recovery Act funding still remains available for both programs.
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