Funding ran out on Friday for a Small Business Administration program
that increased loan guarantees and reduced or eliminated loan fees for
its two largest small-business
recovery lending programs -- a week or so earlier than had been
expected. The most recent influx of funds for the American Reinvestment
and Recovery Act program, $125 million, had been expected to last
through February.
This doesn't mean that loans will cease to be
available to small businesses, but for now, those that need money will
have to accept the relatively less-favorable terms of traditional SBA
loans.
The loan guarantees and the reduced fees had a significant impact: By guaranteeing 90% of the loan (rather than the usual 75%), the SBA reduced lenders' risks, making them more willing to lend money at more favorable rates and on less strict terms;
by covering part or all of the fees, the program made loans more affordable for borrowers. Under the Recovery Act terms, a small business could have saved up to $40,000 on a $2 million loan. That savings could be enough to hire an additional employee -- just the sort of thing the country needs right now.
To read the full, original article click on this link: Small Businesses Will Have to Wait for Favorable SBA Loans - DailyFinance
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