Many SBA lenders have dropped out of the program or severely cut back on lending. They cite two major problems with SBA loans: a frozen secondary market for the loans, which makes it harder for lenders to make new loans; and high fees and other costs that make SBA lending less profitable, especially since interest rates on these loans are capped.
Both the House and the Senate attempt to address these problems in their stimulus bills, but their solutions differ. The House bill would authorize the agency to make loans directly to small businesses, if SBA lenders pass on the deals. It also would increase the government guarantee on 7(a) loans to 95 percent, reducing the risk of making these loans.
The Senate bill focuses on temporary waivers of loan fees, in hopes of making the loans more attractive to borrowers and more profitable for lenders. It also would increase the maximum size of 7(a) loans from $2 million to $3 million in order to meet the needs of more small businesses.
Stimulus bills aim to revive SBA lending
According to MSNBC, the economic stimulus package working its way through Congress most likely will include steps to revive the Small Business Administration’s lending programs.
Is it really possible? Will this really help? What do you think?
Posted by "Arthur" at 9.2.09