SBA Stimulus Funds Set To Expire

by Scott Ramsey on November 17, 2009

We’ve all known for months that the stimulus money put into the SBA programs earlier this year as a part of sections 501 and 502 of the Recovery Act would eventually run out. The SBA has released notice 5000-1131 outlining the procedures to follow during the “transition period”. SBA projects that the agency will have funds to support the Recovery Act initiatives through late-November 2009.

You will recall that in February of 2009 the administration infused money into the SBA programs that effectively eliminated the guarantee fees and increased the guarantee percentage under the 7(a) program to 90%. This has been a huge boost to the program and has really gotten banks interested in becoming active SBA lenders.

We feel that additional monies will be appropriated to continue not only the fee waiver but the increased guarantee percentage well into 2010. Until then, we will continue to process loans under the newly issued guidelines as expeditiously as possible.

For refinance opportunities, borrowers may still want to take advantage of the program even if a fee is involved. The benefits of longer terms, additional money, lower rates (and reduced risk to the bank) usually far outweigh the guarantee fee. The bank would also have the option of paying some or all of the fee, which would be more than offset by the premium earned.

For new business opportunities, SBA loans are still the best alternative for both the borrower and the bank.