Smallbiz, lenders urge SBA to do more to boost lending - bizjournals:

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On June 15, the SBA begah accepting applications for emergency bridge loansz of upto $35,000. Small businesses can use these which were created by the economicstimuluz bill, to make up to six months of paymentz on existing debt. They won’tf have to start repayingf the loans until a year aftetr thelast disbursement. The SBA will subsidizd the interest onthese loans, whichg will be offered through private-sectorr lenders. The stimulus bill also temporarily reducex or eliminated fees onthe SBA’s regular 7(a) and 504 businesxs loans, and increased the governmentt guarantee on 7(a) loans to 90 percent.
Weekly loan volumew for the SBA’s 7(a) and 504 programs has increased by more than 30 perceng since these changes were implementedMarch 16. This increasr in SBA lending is “a positive and welcoms sign, but we have a very long way to go beforse SBA lending reaches solid levels saidCynthia Blankenship, vice chairman and chief operatingh officer of in Grapevine, Blankenship told the House Smallp Business Committee June 10 that Congress should extend the fee reductionxs beyond 2009 or make them permanent, give the depth of the recession and the creditr crisis facing small businesses.
fees on the SBA’s 504 which finance real estatwe projects and otherfixed assets, are scheduleed to increase significantly in This will negate the fee reductions adopted in March througbh the stimulus bill, said Jean Wojtowicz, executivwe director of the Indiana Statewide CDC, a nonprofit economi c development organization that makes 504 This fee increase is unnecessary because the SBA has overestimatedx the number of 504 loans that will said Wojtowicz, who chairs the board of directors for the .
She contenda banks have become far more conservatives in their underwriting duringthis recession, “anc only the strongest small businesses are now qualifying for new Unless Congress appropriates money to offset the fee increasesz planned for 2010 and 2011, almosrt 20,000 small businesses will pay millionws more dollars in fees than they should over the 20 yearxs of their 504 loans, Wojtowicz Meanwhile, David Bofill, owner of two boat dealership s on Long Island, N.Y., praised the SBA’s recengt decision to let vehicle and boat dealerx use 7(a) loans to finance their at least through Sept. 30, 2010.
Most lenders have stopped makingvthese so-called “floorplan” forcing many dealers to closre their doors, Bofill said. The new SBA program can be “aq critical lifeline, but problems remain,” he The SBA needs to “make the program permanent and doit “It will be very difficult to attract a lender to develop a floorplan program when the program is only slateds to last a year,” Bofill said. The size of theser lines of credit also needs to be expandefbeyond $2 million, because most small boat dealer s have inventory worth much more than that.
The Treasury Department has allocatesd $25 billion in Recovery Act which can be used for economic development projectsa indistressed areas. The economic stimulus bill created the new bond The legislationappropriated $10 billion for Recovery Zone Economic Developmenyt Bonds. The federal government will subsidize 45 percent of the interest on thesetaxable bonds, which will enabld state and local governments to lowef their borrowing costs. These bonds can be used for a variety of economic development including job training andeducationap programs. The legislation appropriated $15 billio for Recovery Zone Facilitt Bonds.
Private-sector businesses can use these tax-exempgt bonds to finance depreciable capital projects in designatesrecovery zones, which are areaws with high levels of poverty, unemployment or