In what has been an on again off again congressional lack of priorities, the Senate last night voted to extend the SBA 7(a) loan enhancements for 30 days. In a post I made several weeks ago, I predicted this would happen. President Obama is likely to sign it immediately once both houses of congress have finished with the bill.
What does this mean for SBA 7 (a) loan applicants?
It means you should proceed as planned and get your application in the system with a preferred SBA lender that does numerous SBA loans. To the best of my knowledge, Wells Fargo is the only SBA lender with a national footprint that is seriously committed to the SBA lending program.
It will likely mean that during the next month congress will again consider legislation that will extend the SBA loan enhancements at least through the end of 2010.
These loan enhancements have been very beneficial to small businesses seeking loans during the last year.
The two loan enhancements that matter the most to borrowers and lenders are:
The SBA will give the lender a 90% loan guarantee instead of a 75% guarantee. This lowers the bank’s risk and raises the chances that the loan will be made.
The Treasury will pay the loan guarantee fees on behalf of the borrower. Without the congressional approved enhancements borrowers were saddled with very high fees to obtain credit.
I will update my blog when changes occur.
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