President Obama has signed legislation that would extend the SBA's ability to provide higher guarantee levels through March 28 and fee waivers for 7(a) loans until Sept. 30.
The SBA estimates the additional funding will support about $1.8 billion in small business lending. New approvals of eligible loans with the higher guarantee and reduced fees made possible by the Recovery Act are expected to resume on March 10, according to the SBA. Loan applications from borrowers in SBA's Recovery Loan Queue will be funded first, followed by new loan applications.
As part of the Recovery Act, the SBA received $730 million, which included $375 million to increase the guarantee on 7(a) loans to 90% and to waive borrower fees on most 7(a) and 504 loans. The funds for these programs were exhausted on Nov. 23, and an additional $125 million was provided in December. Those funds were exhausted in late February.
As was the case in November and again in February, the SBA said it is prepared to transition into a queue system as the funds start to wind down in order to ensure the maximum simulative effect of the programs and disbursement of funds. This extension does not affect other SBA Recovery Act programs, including the America's Recovery Capital loan program or the agency's microloans, which still have funds.