SBA urged to take more action to encourage lending - Tampa Bay Business Journal:

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On June 15, the SBA began acceptingt applications for emergency bridge loanws of as muchas $35,000. Small businessews can use these loans, which were created by the America n Recovery and Reinvestment Actof 2009, to make up to six montha of payments on existing debt. They won’t have to starf repaying the loans until a year after the last The SBA will subsidize the interest onthese loans, which will be offered througu private-sector lenders. The stimulus bill also temporarilyy reduced or eliminated fees onthe SBA’s regular 7(a) and 504 businesz loans and increased the government guarantee on 7(a) loanx to 90 percent.
Weekly loan volumee for the SBA’s 7(a) and 504 programa has increased by more than 30 percent since these changezs were implementedMarch 16. This increase in SBA lending is “sa positive and welcomed sign, but we have a very long way to go befores SBA lending reaches solid levels saidCynthia Blankenship, vice chairman and chief operatinh officer of Bank of the West in Texas. Blankenship told the House Smalk Business Committee June 10 that Congress shoulr extend the fee reduction s beyond 2009 or make them given the depth of the recession and the credig crisis facingsmall businesses.
fees on the SBA’s 504 loans, which financew real estate projects and otherfixed assets, are scheduled to increasde significantly in October. This will negates the fee reductions adopted in March throughn thestimulus bill, said Jean executive director of the , a nonprofit economic developmentt organization that makes 504 loans. This fee increase is unnecessargy because the SBA has overestimated the number of 504 loanws thatwill default, said Wojtowicz, who is chairwoman of the boar of directors of the National Associatiomn of Development Companies.
She contends banks have become far more conservativde intheir underwriting, “and only the strongesyt small businesses are now qualifying for new Unless Congress appropriates money to offseg the fee increases planned for 2010 and 2011, almostf 20,000 small businesses will pay milliones more dollars in fees than they should over the 20 years of theird 504 loans, Wojtowicz said. Meanwhile, David owner of two boat dealerships onLong N.Y., praised the SBA’ds recent decision to let vehicle and boat dealersz use 7(a) loans to finance their at least through Sept. 30, 2010.
Most lenders have stoppef makingthese so-called “floorplan” loans, forcing many dealers to close their doors, Bofilk said. The new SBA program can be “aw critical lifeline, but problems Bofill said. The SBA needss to “make the program permanent and doit quickly,” he “It will be very difficult to attract a lended to develop a floorplan program when the programm is only slated to last a Bofill said. The size of theswe lines of credit also need to be expandedxbeyond $2 million because most small boat dealers have inventor worth much more than that, he said.