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WASHINGTON – While a new SBA program could help expedite disaster loan processing for hurricane victims, CUNA said clarification is needed on how credit unions can participate. The SBA rolled out its “GO Loan” program on Nov. 7. It allows credit unions and banks that are PLP and Express lenders to use their own forms and underwriting to get working capital into the hands of small businesses in the Gulf region. The loans, which are modeled after SBAExpress loans, are available up to $150,000; have an 85% guarantee; and applicants will have a decision in 24 hours or less. Although credit unions could participate in the GO Loan program, the problem is many have not been given the green light for the express loan application process, said Mary Dunn, CUNA associate general counsel. The trade group is working with SBA officials to clarify the issue of CU participation. GO Loans will be available through Sept. 30, 2006 to small businesses in the counties and parishes of Texas, Louisiana, Mississippi, Alabama and western Florida that were declared federal disaster areas by President Bush and in the contiguous counties and parishes. Dunn said once clarification is received, more credit unions can become eligible to participate in the program. While the SBA does not set the interest rate on the loans, it does prescribe maximum rates the credit unions and banks may charge. The actual rate is negotiated between the lender and the borrower. Repayment terms are generally between five and 25 years depending on the life of the assets being financed and the cash needs of the business. Working capital loans (inventory and accounts receivable) should be repaid in five to 10 years. All lenders that are authorized to make SBA-backed loans under the SBAExpress program will be eligible to make GO Loans. About 40% of SBA lenders are currently eligible, the agency said. “Through my visits with small business owners in the Gulf Coast it has become clear that the unprecedented scope and magnitude of these twin disasters requires a more creative response beyond our traditional disaster loan program,” said SBA Administrator Hector Barreto. Meanwhile, NCUA is encouraging credit unions to lend their expertise to another new SBA initiative to help speed up the disaster loan process. On Nov. 1, the SBA, kicked off its “Give a Lending Hand” program, which is seeking out credit unions and banks’ SBA experienced loan officers who will be hired as Special Government Employees to assist in processing disaster loans for business owners impacted by hurricanes in the Gulf region. They will review and recommend the approval or decline of the loans. Individuals interested in participating in this initiative will be temporarily located in SBA’s Fort Worth, Texas, office for a minimum of 60 days. According to NCUA, SBA will cover all expenses including salary at government rates; travel to Fort Worth; lodging; a per diem for meals; and local transportation. Qualified individuals will take a leave of absence from their current job and employers will be free to supplement their employees’ government salaries if they so desire. “The `Give a Lending Hand’ initiative is a great way for those in the credit union community to further assist in the recovery process,” said NCUA Chairman JoAnn Johnson. “I encourage credit union staff, experienced volunteers and retirees, especially those with specialized business lending experience, to consider joining in this worthwhile initiative to help rebuild the Gulf Coast region.” The SBA is also looking for retirees who have left the financial services industry in the last 10 years and who would be interested in becoming a temporary government employee for a minimum of 180 days. In recent weeks, SBA has expedited the disaster loan application process for business loans under $100,000, simplified documentation requirements for business disaster loans, urged lenders to provide deferment relief to borrowers in disaster-stricken areas, and hired thousands of additional staff to double the size of the agency. “This is an opportunity for our partners in the business lending community to assist those affected by the terrible disasters that have swept the Gulf Coast region,” Barreto said. “By giving a lending hand, we can together help Gulf Coast small businesses get back on their feet and stimulate the economy.” Those interested in participating in the Give a Lending Hand program may contact Allan Hoberman, director of disaster personnel for SBA’s Office of Disaster Assistance, at [email protected] or 202-205-6734. More information on all of the SBA’s disaster program efforts can be found at www.sba.gov/disaster. [email protected]

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