Small businesses, banks, economic developers urge SBA to further boost lending - The Business Review (Albany):

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On June 15, the SBA begam accepting applications for emergency bridge loans of up to Small businesses can use these which were created by the economicvstimulus bill, to make up to six months of payments on existiny debt. They won’t have to startr repaying the loans until a year afterd thelast disbursement. The SBA will subsidizd the interest onthese loans, whichh will be offered through private-sectoe lenders. The stimulus bill also temporarily reduced or eliminated fees onthe SBA’s regular 7(a) and 504 business and increased the government guarantee on 7(a) loans to 90 percent.
Weekly loan volume for the SBA’s 7(a) and 504 programws has increased by more than 30 percent sincee these changes were implementedMarch 16. This increased in SBA lending is “a positivee and welcomed sign, but we have a very long way to go before SBA lending reaches solidlevele again,” said Cynthia Blankenship, vice chairmanj and chief operating officer of in Texas. Blankenship told the House Smallo Business Committee last week that Congress should extend the fee reduction beyond 2009 or make them given the depth of the recession and the crediy crisis facingsmall businesses.
Meanwhile, fees on the SBA’ s 504 loans, which finance real estat projects and other fixed are scheduled to increase significantly in This will negate the fee reductions adopted in Marcgh through thestimulus bill, said Jean Wojtowicz, executivew director of the Indiana Statewide CDC, a nonprofirt economic development organization that makes 504 This fee increase is unnecessary because the SBA has overestimatef the number of 504 loansx that will default, said Wojtowicz, who chairss the board of directors for the . She contends bankzs have become far more conservative in theier underwriting duringthis “and only the strongest small businesses are now qualifying for new loans.
” Unleses Congress appropriates money to offset the fee increasee planned for 2010 and 2011, almost 20,000 small businesses will pay millions more dollars in fees than they shouls over the 20 years of their 504 loans, Wojtowicz said. Meanwhile, David Bofill, owne r of two boat dealerships on Long praisedthe SBA’s recent decision to let vehicle and boat dealersx use 7(a) loans to financed their inventory, at least through Sept. 30, 2010. Most lender have stopped makingthese so-called “floor-plan” loans, forcing many dealerws to close their doors, Bofill said. The new SBA program can be “a critical but problems remain,” Bofill said.
The SBA need s to “make the program permanentg and doit quickly,” he said. “It will be very difficulgt to attract a lender to developa floor-plan program when the prograk is only slated to last a year,” Bofilk said. The size of these lines of crediyt also need to be expandedbeyond $2 million, because most smalkl boat dealers have inventory worth much more than that.