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Statement from Administrator Mills on Urging Continued Support for Small Businesses' Recovery Loan Programs

 


Queue Activated as SBA Presses for Longer Term Funding



WASHINGTON - U.S. Small Business Administration Administrator Karen
Mills today issued the following statement regarding efforts to ensure
continued funding for two key provisions first implemented as part of
the American Reinvestment and Recovery Act (ARRA) of 2009:


"Two key enhancements to SBA's loan programs - increased guarantees and
reduced fees in our two largest lending programs - have engineered a
significant turnaround in SBA lending and been successful in helping
jump-start our economy for small businesses. To date, these programs
have supported more than $27.5 billion in lending to more than 60,000
small businesses across the country. They have also brought more than
1,300 lenders back to SBA's loan programs, increasing the points of
access for small businesses to get the capital they have needed during
these tough economic times.


"Due to the heavy demand from small businesses for available credit, the
original $375 million provided under the ARRA for these loans was
exhausted in November. Since then, additional funds have been provided
for short-term extensions, and those funds, too, have been exhausted.
As a result, today we communicated to our lending partners that we have
reactivated the Recovery Loan Queue. The queue is an efficient and
transparent way to ensure that every remaining dollar possible is made
available to help small businesses drive economic recovery across the
country.


"Small businesses are a key engine for job creation across the country.
With that in mind, President Obama has laid out an aggressive agenda for
providing small businesses with the tools they need to drive economic
growth. A key piece of that agenda is a longer-term extension of these
increased guarantees and reduced fees, and we urge Congress to move
quickly to continue these critical programs."


SBA's ARRA Programs:


As part of the Recovery Act enacted on Feb. 17, 2009, SBA received $730
million to help small businesses, including $375 million to increase the
SBA guarantee on 7(a) loans to 90 percent and to reduce borrower fees on
most 7(a) and 504 loans. The funds for these programs were exhausted on
Nov. 23, 2009, and an additional $125 million was provided in December.
Those funds were exhausted in late February. An additional $60 million was
provided to extend the programs through March. SBA was authorized for an
additional $40 million in late March, and an additional $80 million was
provided in mid-April to support the programs through May 31.


SBA's 7(a) and 504 ARRA Transition Plan:


SBA has transitioned 7(a) and 504 programs back to their pre-ARRA terms
and communicating those plans with its lending partners. As part of this
plan, SBA has reactivated its Recovery Loan Queue today. The queue will
operate in the same manner as when originally implemented in November
2009.


Sometimes previously approved loans are later cancelled or never
disbursed for a variety of reasons, and the funds committed to those
loans can be applied to applications in the queue. The queue takes this
into account and beginning on the transition date will allow eligible
small businesses, in consultation with their lenders, to choose to be
placed in the queue for possible approval for an ARRA loan if funding
once again becomes available. Small business owners and lenders will
have transparent access to the queue via www.sba.gov/recoveryq and will
be able to remove themselves from the queue at any time to be considered
for a non-ARRA SBA loan with all applicable fees and, for 7(a) loans,
standard guaranty levels.


The authorization for the 90 percent guarantee on 7(a) loans ends on May
31, but the authorization for fee waivers is in place through September
2010.

To learn more about SBA's ARRA programs and other resources for small
businesses, please visit www.sba.gov.

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