Share this
Twitter
Myspace
Digg
Del.icio.us
Reddit
Slashdot
Furl
Yahoo
Technorati
Newsvine
Facebook
Export PDF
Print
E-mail
Tags
BY JAMES A KOSCI
U.S. SMALL BUSINESS ADMINISTRATION
COMMENTARY
It's been a little more than 100 days since the President signed the American Recovery and Reinvestment Act (Recovery Act). In that time the U.S. Small Business Administration (SBA) has implemented new programs to get credit flowing again and has several more on the way that will help small businesses weather this economic storm, and ultimately continue to grow and create jobs.
First and foremost, we enhanced our top two loan programs – 7(a) and 504 – which have so far resulted in $4.3 billion in new loans for small businesses. The SBA temporarily eliminated fees for borrowers on its 7(a) loans and for both borrowers and lenders on its 504 loans.
The SBA also temporarily raised the guarantee on most of its 7(a) loans to as much as 90 percent, up from 75-85 percent. In this short time, there has been a 30 percent increase in average weekly loan dollar volume compared to the weekly average before the passage of the Recovery Act.
In Flemington, Cryogenic Processing Solutions received an SBA-backed $150,000 7(a) loan from Affinity Federal Credit Union. As a result of the provisions in Recovery Act, owners Sheri and Donald Hampson saved $2,700 in loan fees and Affinity Federal Credit Union received a 90 percent guaranty on the SBA loan.
The $150,000 loan the Hampsons received will go toward building a laboratory that will allow their company to conduct testing and provide analysis of industrial cryogenics of process cooling systems used in the rubber and plastics, pharmaceutical, nutraceutrical and food industries. Just as important, the loan will allow the Hampsons to hire additional employees.
Lenders have responded positively to these program changes. From the signing of the Recovery Act on Feb. 17 to May 29, the SBA worked with 484 lenders that had not made an SBA loan since October 2008. Moreover, of those, 219 had not made an SBA loan since at least 2007. This recovery capital is flowing to a broad base of small businesses: 25 percent to rural; 21 percent to minority-owned; 19 percent to women owned; and 9 percent to veteran owned.
On June 15th, SBA launched the America's Recovery Capital (ARC) loan program. The ARC loans will provide a "bridge" for many small businesses to the better economic times ahead. This program provides loans of up to $35,000 to viable, but struggling small businesses to help them make debt payments. ARC loans are interest free to the borrower, deferred repayment loans, which are 100 percent guaranteed by the SBA. The SBA makes the interest payments to the bank.
With the launch of ARC loans, SBA has now put in place programs implementing 88 percent of the $730 million provided to the agency by the Recovery Act.
In addition to the Recovery Act, we have expanded eligibility of our 7(a) program with an alternate size standard, which makes more than 70,000 small businesses newly eligible for SBA support. Also, we are rolling out a pilot program for Dealer Floor Plan financing on July 1. And, in the coming weeks, we will announce other Recovery Act programs, including an expansion of our microloan program, a loan that uses the 504 loan program to refinance debt, and a guarantee program to stimulate sales of 504 first mortgage pools in the secondary market.
America's small businesses are the key to our nations' economic recovery. The SBA is using every tool in our toolbox – and creating new ones when necessary – to help small businesses lead us out of these tough economic times.
James A. Kosci is the New Jersey District Director of the U.S. Small Business Administration.
