New Law Helps Clear SBA $970 Million Loan Queue
The newly signed Small Business Jobs Act of 2010 has helped the SBA approve 1,939 loans totaling nearly $970 million in just one day through new funding for increased loan guarantees and reduced fees.
The loans were approved Oct. 5, the SBA said. Small business owners had been waiting for additional funding and putting applications in the queue since the end of May, when authority for higher loan guarantees expired and previous Recovery Act loan funding was exhausted.
Of the approvals in the queue, SBA approved more than $586 million through 1,273 new loans with funds provided by the Small Business Jobs Act, and 666 loans for more than $383 million with earlier funding that became available after cancellations of applications that had been approved previously under Recovery Act loan terms, most because they had been withdrawn by the applicants, the agency said.
SBA Administrator Karen Mills said the Small Business Jobs Act will support an estimated $14 billion in lending with $505 million in taxpayer funds, including many of the loans approved from the queue. President Obama signed the act Sept. 27.
The loan enhancements for SBA-backed financing were key incentives in helping revive the availability of capital for small businesses after the credit crunch in late 2008 and early 2009, according to Mills. The increased guarantees and reduced fees in SBA's 7(a) and 504 loan helped support nearly $30 billion in SBA-backed loans to nearly 70,000 small businesses.
The SBA reopened its loan queue in May, when funding for the incentives was nearly exhausted. Small business loan applicants who wanted the benefits of the incentives could choose to place their loan in the queue to await funding from either an extension of the enhancements by Congress or funds coming available as a result of cancellations of previously approved Recovery loans, the SBA said.
By the time Obama signed the small business job act Sept. 27, more than 1,400 conditionally approved small business loan applications were in the queue's waiting list, with more than 500 more choosing to go into the queue by Oct. 1. With funds provided through the act, the SBA said it began making final approval of remaining loans in the queue Oct. 1.