There have been a lot of media reports lately about the SBA and its lending programs. Two stimulus packages and a new plan by President Obama’s Administration to increase lending to small business have all happened in the last 18 months.
With all the changes it can get very confusing and hard to keep up to date.
I’ll do my best to give an overview of what’s happening and available for the small business owner. First, if you want to obtain a SBA loan there are programs that don’t require mountains of paperwork. If you are looking for loan sizes greater than $50,000 you will be subject to paperwork. However, if you apply for the community express or micro loan the amount of paperwork isn’t as daunting.
The SBA 7(a) has several programs including the community express and micro loan. These programs are easier for small businesses to apply and qualify for. Even if you are a start-up you may still have a chance at obtaining one of these loans. You still need a good personal credit score to get approved, most of the time better than a 680.
The current status of the SBA stimulus programs:
· Increase the 7(a) loan limit from $2 million to $5 million
· Increase the 7(a) loan guaranty to a maximum of $4.5 million (90%)
· Increase the SBA 405 loan limit from $1.5 million to $5.5 million
· Allow the 405 loan program to refinance short-term commercial real estate loans
· Extend stimulus one to 90% 7(a) guaranty and waive borrower fees through December 2010
· Increase the loan limit on microloans from $35,000 to $50,000
· Allow 7(a) loans to be sold to the secondary market in $500,000 increments
The Obama administration’s small business plan calls for $30 billion to be taken from the $787 billion TARP program and infused in the SBA loan programs. The intent is to increase the lending to small business.
With all the changes and additional provisions my hope is that banks will want to lend more. If the government is backing 90% of the 7(a) loans now I can’t see why banks would be afraid of lending these types of programs. Especially
when not too long ago they were offering ridiculous mortgages at 100%
of the value of the home while prices were dropping.
If you have any experiences in obtaining SBA loans
let us know in the comments section below and provide feedback on any
lenders or programs you applied for. We would love to share your stories.