The SBA said today it will temporarily expand its 7(a) loan program to allow businesses to qualify based on net worth and average income potentially opening up eligibility to more than 70,000 small businesses.
The agency said the temporary 7(a) loan size standard will parallel the standard for its 504 Certified Development Company loan. The net worth for the company and its affiliates can not be in excess of $8.5 million. The average net income after federal income taxes excluding any carry-over losses for the preceding two completed fiscal years can not be more than $3 million.
The change will go into effect early next week and will run through Sept. 30, 2010, the SBA said. As a result of the temporary change, more than 70,000 additional small businesses including auto and RV dealerships, auto industry suppliers and others could be eligible to apply for SBA 7(a) loans.
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In March, the agency raised the guarantee on 7(a) loans to 90% and reduced fees for borrowers. Since then, it said it has seen average weekly 7(a) loan volume increase by more than 25% and new SBA loans made by nearly 450 lenders who had not made loans since October 2008.
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