The SBA's two largest loan programs recently received another extension that is estimated to support nearly $1.4 billion in small business lending under legislation signed by President Obama March 26.
Under the new $40 million extension, the SBA said it may continue to waive loan fees and provide higher guarantee levels on 7(a) loans through April, 30 or until the funds provided are exhausted.
As part of the Recovery Act enacted on Feb. 17, 2009, the SBA received $730 million to help small businesses, including $375 million to increase the agency's 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, 2009, and an additional $125 million was provided in December. Those funds were exhausted in late February and an additional $60 million was provided subsequently. That funding was exhausted March 26.
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The increased guarantee and reduced fees on SBA loans helped put more than $23 billion into the hands of small business owners and brought more than 1,100 lenders back to the agency's loan programs, the SBA said. As a result, average weekly loan approvals by SBA have climbed by 86% compared to the weekly average before passage of the Recovery Act.
When the funds provided for March were exhausted, SBA reactivated the Recovery Loan Queue, as occurred in November and again in February, to cover the brief period of time before the funds from the extension become available, which should be within a few days. Eligible small business loan applicants, in consultation with their lenders, may choose to be placed in the queue for possible approval of a Recovery Act loan when funding becomes available.
For non-Recovery Act 7(a) or 504 loans already funded during the Recovery Loan Queue period, this extension does not provide a retroactive guarantee or fee relief, according to the SBA. Loans that were funded under non-Recovery Act terms cannot be canceled and resubmitted to take advantage of the Recovery Act extension provisions. This latest extension does not affect other SBA Recovery Act programs, including the America's Recovery Capital loan program or the agency's microloans. Recovery Act funding still remains available for both of those programs.
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