How about some good news on the small business lending front for a change? Last week, President Obama signed legislation extending popular provisions of the American Recovery and Reinvestment Act that benefit many companies borrowing from the Small Business Administration.
The extended provisions include a 90 percent guarantee of SBA-backed loans (compared to the standard 75 percent) and the elimination of SBA loan fees, which can top $50,000 on a $2 million loan.
“These fees can be significant, so this is one big thing you don’t have to worry about in an already difficult credit market,” says Anina Butler, vice president of SBA lending for First Trade Union Bank in Boston. The funding extension is expected to support about $1.8 billion in small business loans.
But there’s a catch: The extension is only effective until March 28, so you have to act fast.
SBA administrator Karen Mills says these ARRA provisions have been popular among small business owners and a big boost to the economy. “These key loan programs have been successful in helping jump-start the economic recovery for America’s small businesses,” she said in a recent SBA release.
Mills added that the SBA will continue working with the president and Congress to extend the additional loan provisions past the new March 28 deadline.