The Senate voted to extend small business stimulus for SBA loans this week. Specifically, it extended two small business stimulus programs that cut fees and provided guarantees for SBA loans. The Wall Street Journal reports that the funding for these two programs was running the risk of having no stimulus to fund them back in November, as we previously discussed. The new extension grants a maximum guarantee of 90% for SBA loans. When there was no stimulus for SBA loans, the maximum guarantee was 75%.
Mary Landrieu (Dem-LA) was quoted by the Wall Street Journal as saying, “Small businesses have been left in limbo since the funding ran out. [The legislation] will provide a lifeline to small businesses in need of credit.”
Even with the government help for small businesses, a majority of small businesses rely on private lending. However, the small business stimulus may help private lenders gauge who will be successful with their small business. Tony Wilkinson, president of the National Association of Government Guaranteed Lenders told the Wall Street Journal: “The conventional credit market will not near normal until sometime in 2011 because the typical small business will walk in with negative trends on his financial statement. But that’s why the SBA programs are important, because lenders can say, ‘Hey, this is a survivor who will probably make it.’”
Related Resources:
- No Stimulus For SBA Loans Hurts Small Business (Findlaw’s Free Enterprise)
- Obama Calls For Small Business Stimulus Package (Findlaw’s Free Enterprise)
- Stimulus Package for Small Business: Increased SBA Backed Loans (Findlaw’s Free Enterprise)
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