SBA Stimulus Cash Down to Zero
Small business owners have drained the Small Business Administration’s two most popular loan programs of excess stimulus funds, a shortage that could send loan volumes tumbling without government action.
Hoping to spur small business growth, the federal government earlier this year injected about $375 million into the SBA’s 7(a) and 504 loan programs. The influx aimed to curb fees on SBA loans and boost the administration’s loan guarantees to 90 percent for some programs.
Fighting a tight credit market, thousands of entrepreneurs flocked to the funding. As of Monday, the SBA had exhausted the entire $375 million allotment. Now, business owners nationwide are waiting to see if a crucial source of financial stability is gone for good.
“We are continuing to work with Congress on funds to continue these programs, which have helped engineer a turnaround in SBA lending following last year’s credit crunch and resulted in more than 40,000 loans to small businesses during these tough economic times,” Jonathan Swain, assistant administrator for communications and public liaison at the U.S. Small Business Administration, told reporters this week.
The government is looking for ways to keep the program upgrades going through mid-February. Initial estimates put the price tag around $100 million.
In the mean time, the SBA started a waiting list for companies that can afford to hold off for funding lines to be re-established. Companies with conditional approval can get a spot in the Recovery Loan Queue.
President Obama is expected to push Congress in the coming weeks to restart funding for these key SBA loan programs.
In all, the SBA has received more than $730 million in federal stimulus dollars.