The Small business Administration has been charged most recently with helping businesses weather the recession, and money is running out. The 7(a) lending program gives out loans, personal and large, to small companies around the country. The program, which was funded by the American Recovery and Reinvestment Act, is in a holding pattern, waiting for more money.
Resource for this article: SBA running out of low cost loans to businesses by Personal Money Store
Low cost loans provided by the SBA
The SBA doesn’t give instant cash to business owners. The Government agency will back up loans made by banks. With the SBA "insurance policy" against default in place, banks are much more willing to act as money lender to small businesses. The stimulus package authorized the SBA to waive fees and guarantee 90 percent of a loan's actual value.
SBA loans and their effect
To keep their business going, small companies rely on credit. Over just a three-month period of April to June, the SBA lent out $ 3 billion over 12,123 loans. Compared to the same quarter of last year, that is 21 percent more pay day for cash-strapped businesses. The program, nevertheless, is still waiting for some new authorization, which is leaving millions of dollars of loans in limbo.
SBA’s loan queue
Since the official authorization for SBA loans expired in May, the agency was forced to queue requests for loans. There are currently 419 borrowers waiting for more than $ 123 million in SBA-guaranteed funding. Because these SBA loans are usually one of the very few types of credit available to these companies, the agency is scrambling to help them find financing. Given the length of the recession and the fact the economy is not yet growing at a steady pace, it is almost for certain that programs like the SBA 7(a) program will need to continue providing support for small business.
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