Back when the American Recovery and Reinvestment Act (ARRA) was passed, the Small Business Administration (SBA) received funding to help entice lenders to make loans under the SBA’s two most popular loan programs, the 7(a) and 504a loans.
There were a number of enhancements provided for to the SBA under the ARRA, but the two that were most important was raising the SBA loan guarantee from 75-80% to 90% and having the federal government picking up the tab for the large guarantee fees SBA loans have recently been known for.
The SBA’s temporary enhancements were to expire December 31, 2009 or when allocated funds expired. On November 24, 2009, the SBA announced that had exhausted all the ARRA monies allocated. If your loan wasn’t closed by that date, your loan went into a “queue” with the expectation that congress would allow those loans in the queue to be completed. The SBA also expected some of the loans in the queue to be cancelled and some of them to be converted to non-ARRA SBA loan program rules.
On Saturday December 18, 2009, President Obama signed an interim spending bill for the Department of Defense that had a rider allocating an additional $125 million to complete the queued loans before February 28, 2010. Provisions allowed additional SBA loans to enter the queue after December 28, 2009 but they had to be completed by February 28, 2009.
If you have a queued loan, the good news is now you can get it moving again. If you plan on requesting a new loan that hasn’t been entered in the queue, you should do several things.
- Very quickly get all your SBA loan materials together.
- Find an SBA lender in your area that has done a large number of SBA 7(a) and 504 loans in the last year.
- If you seek out an SBA lender that has only made a few SBA loans in the last year, you risk having time setbacks because the SBA loan program is very complex and requires loan officers to thoroughly understand all the credit and eligibility rules.
A number of influential members of congress in both the House of Representatives and Senate have indicated they are going to sponsor a bill extending the ARRA SBA loan enhancement programs past February 28, 2009. I believe this will happen, but with all things in
I have written many times that I believe the SBA loan enhancement program has been the very best program that has come out of the ARRA. It is in all small business’ interest to see these loan guarantee enhancements continued until the economy is firmly back on its feet.
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