Obama approves extension of loan enhancements
WASHINGTON — President Barack Obama has signed legislation providing $80 million in additional funding to continue enhancements in the U.S. Small Business Administration’s (SBA’s) two key small business loan programs. The enhancements, first made available under the American Recovery and Reinvestment Act, include a higher guarantee on some SBA-backed loans and small business fee relief.
The SBA estimates the $80 million will support about $2.8 billion in small business lending under the 7(a) and 504 programs.
As part of the Recovery Act, SBA received $730 million to help small businesses, including $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to reduce borrower fees on most 7(a) and 504 loans.The funds for these programs were exhausted Nov. 23, 2009, and an additional $125 million was provided in Dec. 2009. Those funds were exhausted in late Feb. 2010, and an additional $60 million was provided subsequently. SBA was authorized for an additional $40 million in late March.
Under the new extension SBA may continue to reduce loan fees in its 7(a) and 504 programs and to provide higher guarantee levels on 7(a) loans through May 2010, or until the funds provided under the bill are exhausted.
This extension has no effect on the continued availability of financing under other SBA Recovery Act programs, including SBA’s America’s Recovery Capital (ARC) loan program and the agency’s Microloan program. Recovery Act funding still remains available for both of those programs.
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