Will exciting changes in SBA lending continue to create loan opportunities for small businesses?

Christine Young

VP & SBA Program Officer

cyoung@venturebankonline.com

venturebankonline.com

Topic: Banking / Finance

SBA loan programs help small business owners looking to start, expand or acquire a small business. When a business has trouble getting conventional commercial financing, SBA loans can be a great alternative. Recently, exciting changes made the programs even better.

The Small Business Jobs Act passed in September 2010 extends the increased guaranty percentage on SBA 7(a) loans and borrower fee waiver on SBA 7(a), 504 and Express loans, which were initially approved with the American Recovery and Reinvestment Act of 2009. The higher guaranty percentages allow banks to help more borrowers with their financing needs while the fee elimination makes SBA loans more affordable for borrowers seeking financing.

One of the most impactful changes that occurred with the Small Business Jobs Act is the increase in maximum loan amounts from $2 million to $5 million for 7(a) and 504 loans; and loans made under the Express loan program, often utilized for lines of credit, can be as large as $1 million for the next year. The maximum loan size was previously $350,000. In addition, the size standards of businesses eligible for SBA lending have increased, which means larger businesses may now qualify for SBA lending.

Another significant change is the SBA 504 program will soon allow for refinancing of small business owner occupied commercial real estate. This will be very important as under-valued commercial real estate loans with balloons come due and small businesses struggle to find conventional banks willing to refinance.

With the extension of the fee waiver and the exciting new changes, now is a great time to meet with a bank regarding any financing you’re considering. It’s important to understand that both fee elimination and the guaranty percentage increase are only effective through December 31, 2010 or until the appropriated funds run out (which may occur before the end of November). For more information about SBA programs or recent changes in SBA lending, contact Christine Young at 763-398-5815.