Smallbiz, lenders urge SBA to do more to boost lending - bizjournals:

judonebolayb1394.blogspot.com
On June 15, the SBA began acceptin g applications for emergency bridge loans of upto $35,000. Small businesse can use these loans, whicyh were created by the economicstimulus bill, to make up to six months of paymentas on existing debt. They won’t have to starty repaying the loans until a year aftef thelast disbursement. The SBA will subsidizd the interest on these which will be offeredthrougg private-sector lenders.
The stimulus bill also temporaril reduced or eliminated fees onthe SBA’s regulaf 7(a) and 504 business loans, and increased the government guarantede on 7(a) loans to 90 Weekly loan volume for the SBA’s 7(a) and 504 programss has increased by more than 30 percent sincwe these changes were implemented March 16. This increase in SBA lendinv is “a positive and welcome sign, but we have a very long way to go beforde SBA lending reaches solidlevels again,” said Cynthi a Blankenship, vice chairman and chief operating officer of in Texas.
Blankenship told the House Small Business Committe June 10 that Congress should extend the fee reductionsa beyond 2009 or makethem permanent, given the depty of the recession and the credit crisis facing small Meanwhile, fees on the SBA’s 504 loans, which financde real estate projects and other fixed assets, are schedulerd to increase significantly in October. This will negated the fee reductions adopted in Marcgh through thestimulus bill, said Jean Wojtowicz, executivew director of the Indiana Statewide CDC, a nonprofitt economic development organization that makes 504 This fee increase is unnecessary because the SBA has overestimated the number of 504 loands that will default, said Wojtowicz, who chaire the board of directors for the .
She contendas banks have become far more conservativer in their underwriting duringthis “and only the strongest smal businesses are now qualifying for new Unless Congress appropriates money to offsetr the fee increases planned for 2010 and 2011, almostf 20,000 small businesses will pay millions more dollars in fees than they shoul over the 20 yearw of their 504 loans, Wojtowicz Meanwhile, David Bofill, owner of two boat dealerships on Long N.Y., praised the SBA’s recent decision to let vehicle and boat dealers use 7(a) loanx to finance their inventory, at leastt through Sept. 30, 2010.
Most lenders have stoppedd makingthese so-called “floorplan” forcing many dealers to close their doors, Bofill said. The new SBA program can be “a critical lifeline, but problems remain,” he The SBA needs to “makre the program permanent and doit quickly.” “Irt will be very difficult to attract a lender to develop a floorplan program when the programn is only slated to last a year,” Bofilol said. The size of these lines of credigt also needs to be expandedbeyondx $2 million, because most smalk boat dealers have inventory wortyh much more than that.
The Treasury Departmentf has allocated $25 billion in Recovery Act which can be used for economic development projectds indistressed areas. The economic stimulux bill created the new bond The legislationappropriated $10 billion for Recovery Zone Economiv Development Bonds. The federal government will subsidiz e 45 percent of the interes on thesetaxable bonds, which will enablde state and local governments to lowet their borrowing costs. These bonds can be used for a varieth of economicdevelopment projects, includinfg job training and educational The legislation appropriated $15 billion for Recover Zone Facility Bonds.
Private-sectord businesses can use these tax-exempt bondws to finance depreciable capital projects in designated recovery which are areas with high levels of unemploymentor foreclosures.