Understanding the SBA Programs in the Recovery Act
\n\u2022 For small businesses, the Recovery Act temporarily eliminates SBA guaranteed 7(a) and 504 loan
\nfees and offers tax benefits. For lenders, it temporarily eliminates loan fees on Section 504 loans. The fee
\neliminations are retroactive to Feb. 17, 2009, the day the Recovery Act was signed. The Act also
\nprovides guarantees up to 90 percent on some types of 7(a) loans to qualified small businesses. The
\ntemporary loan fee eliminations and 90 percent guarantee provisions will apply to approximately
\n$8.7 billion of 7(a) loans and $3.6 billion of 504 loans. SBA estimates this will cover lending in both
\nprograms through calendar year 2009.
\n\u2022 SBA is developing a loan program created by the Recovery Act to temporarily assist broker-dealers who
\nbuy guaranteed 7(a) loans, which will help restore the secondary markets for 7(a) loans. In addition, the
\nTreasury will commit up to $15 billion in TARP funds to further help unfreeze the small business
\nlending market by purchasing pooled 7(a) loan guarantees and 504 first mortgages. These actions will
\nbenefit community banks, credit unions and other small lenders.
\n\u2022 America’s Recovery Capital (ARC) loan program will offer deferred-payment loans of up to $35,000
\nbacked 100 percent by SBA to viable small businesses that need help making payments on an existing,
\nqualifying loan for up to six months. This new program is intended to give small businesses some
\ntemporary financial relief to keep their doors open and get their cash flow back on track so they can
\nmaintain existing jobs and ultimately create new jobs. Repayment does not begin until 12 months after
\nthe loan is fully disbursed. (ARC loans cannot be made to cover payments on an existing loan that was
\nguaranteed by SBA before Feb. 17, 2009, the day the bill was signed into law.)
\n\u2022 Expanding SBA’s microloan program provides extra funding for SBA-backed microlenders across the
\ncountry. The bill provides enough for $50 million in new SBA microloans, which are delivered by non-
\nprofit, community-based intermediary lenders across the country. These loans can be for up to $35,000
\nand come with technical assistance and training for every borrower.
\n\u2022 Expanding Surety Bond Program limits will help small businesses compete for the billions of dollars in
\ncontracts that are needed to implement the Recovery Act. By raising the maximum amount for contracts
\nthat qualify for SBA surety bonds to $5 million, and up to $10 million for certain contracts, more small
\nbusinesses will be able to help drive economic recovery.
\n\u2022 A new program to guarantee Section 504 program first mortgages will provide fresh liquidity to the first
\nmortgage market. Through this program SBA will establish a process for private sector entities to apply
\nfor federal guarantees on pools of first lien position Section 504 loans.
\n\u2022 A new Section 504 refinancing program will help expand existing long-term projects by working with
\nCertified Development Companies to restructure and refinance certain existing loans into SBA-backed
\n504 loans.
\n\u2022 The Recovery Act also enables SBA to expand its Small Business Investment Company
\ndebenture program to assist this source of venture capital. The SBIC office is working on the necessary
\nregulations and notices for licensees alerting them that they may be eligible for additional SBA financial
\nassistance and, also, that they will be required to invest 25 percent of their financing dollars in “smaller”
\nenterprises.
\nFor 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
\nwww.recovery.gov.<\/p>\n","protected":false},"excerpt":{"rendered":"
Understanding the SBA Programs in the Recovery Act \u2022 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 … Continue reading