SBA Out of Money For Loan Breaks

From Washington.Bizjournals.com:

The Small Business Administration once again has run out of money for breaks that made its loans less risky for lenders and more affordable for borrowers.

The economic stimulus bill temporarily increased the government guarantee to 90 percent on the SBA’s flagship 7(a) loans and reduced or eliminated fees on 7(a) and 504 loans, which primarily are used for real estate. Congress has extended these enhancements four times, but the SBA announced Wednesday that it has exhausted all of the funds provided in the most recent extension.

As a result, the agency has reactivated its waiting list for borrowers who want to receive the higher guarantee and reduced fees when — and if — Congress provides funds for another extension. Pending legislation would extend these breaks through the end of the year, but it is not clear whether this bill will be enacted before Congress leaves for its weeklong Memorial Day break.

Until Congress acts, small businesses seeking SBA loans can either place their applications in a queue to wait for additional funding, or take a loan without the higher government guarantee or reduced fees.

The higher guarantee and reduced fees “engineered a significant turnaround in SBA lending and have been successful in helping jumpstart our economy for small businesses,” SBA Administrator Karen Mills said.

The First Small Business Loan Of The Year Goes To ....

Earlier today a coworker sent me this link to an article on CNN Money, that offers a unique perspective of small business lending in the U.S. CNN worked with the small business association to identify the first SBA loan that was awarded this year. The loan went to the owner of Lawlor’s, a sportswear store in Omaha, and you can read about this interesting story below.

To kick off the new year, we asked the Small Business Administration to find us the first business to receive funding this year through an SBA loan. The agency came back with Lawlor's Custom Sportswear in Omaha, which had its loan application approved Jan. 7 and received a $100,000 check from its bank, Security National Bank of Omaha, on Jan. 19.

When an opportunity arose in November to rent prime real estate in a popular area shopping mall, Pat Lawlor knew it wasn't exactly the best time to expand his modest chain of sports apparel retail stores.

Revenues for Lawlor's Custom Sportswear, which has 28 employees in four locations in and around Omaha, were on track to be down 10% for the year. Plus, the company was already trying to pay off substantial debt.

"I'd be lying if I said that it wasn't a bad year," Lawlor said.

Continue reading at CNN Money.com…