SBA and the ARRA

Understanding the SBA Programs in the Recovery Act
• For small businesses, the Recovery Act temporarily eliminates SBA guaranteed 7(a) and 504 loan
fees and offers tax benefits. For lenders, it temporarily eliminates loan fees on Section 504 loans. The fee
eliminations are retroactive to Feb. 17, 2009, the day the Recovery Act was signed. The Act also
provides guarantees up to 90 percent on some types of 7(a) loans to qualified small businesses. The
temporary loan fee eliminations and 90 percent guarantee provisions will apply to approximately
$8.7 billion of 7(a) loans and $3.6 billion of 504 loans. SBA estimates this will cover lending in both
programs through calendar year 2009.
• SBA is developing a loan program created by the Recovery Act to temporarily assist broker-dealers who
buy guaranteed 7(a) loans, which will help restore the secondary markets for 7(a) loans. In addition, the
Treasury will commit up to $15 billion in TARP funds to further help unfreeze the small business
lending market by purchasing pooled 7(a) loan guarantees and 504 first mortgages. These actions will
benefit community banks, credit unions and other small lenders.
• America’s Recovery Capital (ARC) loan program will offer deferred-payment loans of up to $35,000
backed 100 percent by SBA to viable small businesses that need help making payments on an existing,
qualifying loan for up to six months. This new program is intended to give small businesses some
temporary financial relief to keep their doors open and get their cash flow back on track so they can
maintain existing jobs and ultimately create new jobs. Repayment does not begin until 12 months after
the loan is fully disbursed. (ARC loans cannot be made to cover payments on an existing loan that was
guaranteed by SBA before Feb. 17, 2009, the day the bill was signed into law.)
• Expanding SBA’s microloan program provides extra funding for SBA-backed microlenders across the
country. The bill provides enough for $50 million in new SBA microloans, which are delivered by non-
profit, community-based intermediary lenders across the country. These loans can be for up to $35,000
and come with technical assistance and training for every borrower.
• Expanding Surety Bond Program limits will help small businesses compete for the billions of dollars in
contracts that are needed to implement the Recovery Act. By raising the maximum amount for contracts
that qualify for SBA surety bonds to $5 million, and up to $10 million for certain contracts, more small
businesses will be able to help drive economic recovery.
• A new program to guarantee Section 504 program first mortgages will provide fresh liquidity to the first
mortgage market. Through this program SBA will establish a process for private sector entities to apply
for federal guarantees on pools of first lien position Section 504 loans.
• A new Section 504 refinancing program will help expand existing long-term projects by working with
Certified Development Companies to restructure and refinance certain existing loans into SBA-backed
504 loans.
• The Recovery Act also enables SBA to expand its Small Business Investment Company
debenture program to assist this source of venture capital. The SBIC office is working on the necessary
regulations and notices for licensees alerting them that they may be eligible for additional SBA financial
assistance and, also, that they will be required to invest 25 percent of their financing dollars in “smaller”
enterprises.
For more information about the programs offered by the SBA under the Recovery Act, visit the SBA Web page at www.sba.gov/recovery, contact the SBA Answer Desk at 1-800-U-ASK-SBA, or contact your local SBA District Office. For more information about the provisions of the broader Recovery Act, visit
www.recovery.gov.