SBA Loan Queue Cleared One Week After President Obama Signs Jobs Act

All of the loan applications placed in the U.S. Small Business Administration’s loan queue by small-business borrowers have received final approval, SBA Administrator Karen Mills announced today. The approvals, which were completed Monday, amount to 1,939 loans for nearly $970 million.

Final approval follows President Obama’s signing of the Small Business Jobs Act of 2010 on Sept. 27, which provided funding for the extension of increased guarantees and reduced fees in SBA’s two largest loan programs. Small-business owners have been waiting for additional funding and putting applications in the queue since the end of May, when authority for higher loan guarantees expired and, soon after, previous Recovery loan funding was exhausted.

Of the approvals in the queue, SBA approved more than $586 million through 1,273 new loans with funds provided by the Small Business Jobs Act, and 666 loans for more than $383 million with earlier funding that became available after cancellations of applications that had been approved previously under Recovery Act loan terms -- most, because they had been withdrawn by the applicants.

"Enhancements first made under the Recovery Act have made SBA-backed loans a key source of much-needed capital for tens of thousands of small-business owners, helping them not just keep their doors open, but also grow and create jobs all across the country," said Mills.

"Beginning in May, we saw the SBA loan queue begin to grow, which was evidence of both the continued need for these tools and the challenges small-business owners face in getting loans," Mills noted. "Within days of the President’s signature, the authority and the funding provided in the Small Business Jobs Act have allowed us to clear out our loan queue and begin getting capital in the hands of the more than 1,900 small-business owners who had been waiting -- some, for most of the summer."

Mills pointed out that the Small Business Jobs Act will support an estimated $14 billion in lending with only $505 million in taxpayer funds -- including many of the loans approved from the queue.

The loan enhancements for SBA-backed financing were key incentives in helping revive the availability of capital for small businesses after the credit crunch in late 2008 and early 2009. The increased guarantees and reduced fees in SBA’s two largest lending programs sparked a significant turnaround in SBA lending and have been instrumental in helping jump-start the economy for small businesses.

From the passage of the Recovery Act in February 2009 through the end of September, these incentives for borrowers and lenders helped support nearly $30 billion in SBA-backed loans to nearly 70,000 small businesses.

The SBA re-opened its loan queue in May, when funding for the incentives was nearly exhausted. Small-business loan applicants who wanted the benefits of the incentives could choose to place their loan in the queue to await funding from either an extension of the enhancements by Congress, or funds coming available as a result of cancellations of previously approved Recovery loans.

By the time President Obama signed the Small Business Jobs Act on Sept. 27, more than 1,400 "conditionally" approved small-business loan applications were in the queue’s waiting list -- with more than 500 more choosing to go into the queue by Oct. 1. With funds provided in the Small Business Jobs Act, SBA began making "final" approval of remaining loans in the queue on Oct. 1.

SOURCES: Library of Congress, U.S. Small Business Administration
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Recovery Loan Queue Activated as SBA Presses for Longer-Term Funding

U.S. Small Business Administration Administrator Karen Mills today issued the following statement regarding efforts to ensure continued funding for two key provisions first implemented as part of the American Reinvestment and Recovery Act [ARRA] of 2009:

"Two key enhancements to SBA’s loan programs -- increased guarantees and reduced fees in our two largest lending programs -- have engineered a significant turnaround in SBA lending, and have been successful in helping jump-start our economy for small businesses," said Mills. "To date, these programs have supported more than $27.5 billion in lending to more than 60,000 small businesses across the country. They have also brought more than 1,300 lenders back to SBA’s loan programs, increasing the points of access for small businesses to get the capital they have needed during these tough economic times.

"Due to the heavy demand from small businesses for available credit, the original $375 million provided under the ARRA for these loans was exhausted in November. Since then, additional funds have been provided for short-term extensions, and those funds, too, have been exhausted. As a result, today we communicated to our lending partners that we have reactivated the Recovery Loan Queue. The queue is an efficient and transparent way to ensure that every remaining dollar possible is made available to help small businesses drive economic recovery across the country.

"Small businesses are a key engine for job creation across the country. With that in mind, President Obama has laid out an aggressive agenda for providing small businesses with the tools they need to drive economic growth. A key piece of that agenda is a longer-term extension of these increased guarantees and reduced fees, and we urge Congress to move quickly to continue these critical programs."

SBA’s ARRA Programs
As part of the Recovery Act, enacted on Feb. 17, 2009, SBA received $730 million to help small businesses -- including $375 million to increase the SBA guarantee on 7[a] loans to 90 percent, and to reduce borrower fees on most 7[a] and 504 loans.

The funds for these programs were exhausted on Nov. 23, 2009, and an additional $125 million was provided in December. Those funds were exhausted in late February, and an additional $60 million was provided to extend the programs through March. SBA was authorized for an additional $40 million in late March, and an additional $80 million was provided in mid-April to support the programs through May 31.

SBA’s 7[a] and 504 ARRA Transition Plan
SBA has transitioned 7[a] and 504 programs back to their pre-ARRA terms and is communicating those plans with its lending partners. As part of this plan, SBA has reactivated its Recovery Loan Queue today. The queue will operate in the same manner as when originally implemented in November 2009.

Sometimes previously approved loans are later cancelled or never disbursed for a variety of reasons, and the funds committed to those loans can be applied to applications in the queue. The queue takes this into account and, beginning on the transition date, will allow eligible small businesses -- in consultation with their lenders -- to choose to be placed in the queue for possible approval for an ARRA loan if funding once again becomes available.

Small-business owners and lenders will have transparent access to the queue via www.sba.gov/recoveryq, and will be able to remove themselves from the queue at any time to be considered for a non-ARRA SBA loan with all applicable fees and, for 7[a] loans, standard guaranty levels. Authorization for the 90 percent guarantee on 7[a] loans ends on May 31, but the authorization for fee waivers is in place through September 2010.

To learn more about SBA’s ARRA programs and other resources for small businesses, visit www.sba.gov.

GoodBiz113's Take
This timely move by SBA should provide welcome reprieve for small-business owners, whose business-development efforts have been hamstrung by a lack of capital. Now, let's just hope that lenders fully participate in the Administration's practical, well-intentioned and unprecedented efforts to promote far-reaching small-biz growth.

SOURCE: U.S. Small Business Administration
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Administrator Mills: SBA Re-Activating Recovery Loan Queue by Monday, Feb. 22

SBA issued the following statement today from Administrator Karen Mills [pictured] regarding efforts to ensure continued funding for two key provisions in the American Reinvestment and Recovery Act [ARRA] of 2009:

"SBA’s most popular ARRA provisions -- the increased guarantee and reduced fees in the two largest lending programs -- have helped engineer a significant turnaround in SBA lending. Continuing those ARRA provisions is SBA’s top priority.

"Through the original $375 million and the additional $125 million appropriations for these two provisions, SBA has supported more than $20 billion in lending to small businesses across the country and seen its average weekly loan volume increase by nearly 90 percent since February 2009.

"Through ARRA, we brought nearly 1,100 lending institutions back to the SBA’sprograms that had not made an SBA loan since at least 2007. All told, these steps have benefited tens of thousands of small businesses and supported hundreds of thousands of jobs during these tough economic times. However,we know there is still more work to be done. As the President has requested, we will continue to work with Congress to extend these programs through September 2010.

"The additional $125 million appropriation approved in December to extend SBA’s 7[a] loan guarantee to 90 percent, and reduce or eliminate borrower fees on both the 7[a] and 504 loans, will be used faster than expected.

"Loan volume has surged since earlier this week, when an Information Notice was released to lenders. SBA communicated with its lending partners today that it will re-activate the Recovery Loan Queue no later than Monday, Feb. 22. The Queue is an efficient and transparent process that will ensure that every remaining dollar possible is made available to help small businesses drive economic recovery across the country.

"The SBA advocates for small businesses across the federal government, and will continue its efforts to keep America’s small businesses on a path to recovery and long-term success. Small businesses are a central piece of President Obama’s Jobs Plan because they have been, and will continue to be, a key engine for job creation across the country.

"With that in mind, President Obama laid out an aggressive agenda for providing small businesses with the support they need to create jobs and drive economic recovery. That agenda includes proposals in three key areas: expanding access to capital; providing tax incentives to encourage job creation; and maximizing the potential of innovative, high-growth companies."

SBA’s ARRA Programs
SBA received $730 million in ARRA to support economic recovery programs for small businesses. Included in the appropriation was $375 million to support raising the government guarantee to 90 percent on SBA’s 7[a] loans, and reducing some lender and borrower fees on its 7[a] and 504 loans -- the agency’s two largest lending programs.

The funds for these popular provisions ran out in November 2009. SBA received an additional $125 million appropriation in December 2009, along with authority to continue both of the programs through February.

SBA’s 7[a] and 504 ARRA Transition Plan
SBA is in the process of finalizing the plan for transitioning its 7[a] and 504 programs back to their pre-ARRA terms and communicating those plans with its lending partners. This plan, when implemented, will include re-activating the Recovery Loan Queues no later than Monday, Feb. 22, 2010. The Queues will operate in the same manner as when originally implemented in November 2009.

Sometimes, previously approved loans are later cancelled or never disbursed for a variety of reasons. The Queues take this into account and, beginning on the transition date, will allow eligible small businesses -- in consultation with their lenders -- to choose to be placed in the Queue for possible approval of an ARRA loan if funding becomes available.

Small-business owners and lenders will have transparent access to the Queue via http://www.sba.gov/recoveryq/index.html, and will be able to remove themselves from the Queue at any time to be considered for a non-ARRA SBA loan with all applicable fees and, for 7[a] loans, standard guaranty levels.

Authorization for the 90 percent guarantee on 7[a] loans ends Feb. 28, 2010, though funds may be exhausted sooner. Furthermore, applications in the Queues after Feb. 28, 2010, will only be eligible for decreased or eliminated borrower fees when funds become available.

To learn more about SBA’s ARRA programs and other resources for small businesses, please visit http://www.sba.gov/.

SOURCES: Recovery.gov, U.S. Small Business Administration, The White House
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SBA Secures Funding to Extend Recovery Act Loans; Agency Plans to Restart Recovery Loan Approvals by Dec. 28

President Obama signed the U.S. Department of Defense [DOD] appropriations bill on Saturday [Dec. 19], which included $125 million to continue through Feb. 28, 2010 -- the enhancements made possible through the American Recovery and Reinvestment Act [ARRA] to SBA’s two largest loan programs. The SBA estimates the additional funding will support $4.5 billion in small-business lending.

New approvals of loans with the higher guarantee and reduced fees made possible by ARRA are expected to begin by Dec. 28. Loan applications from borrowers who chose to be placed in the SBA’s Recovery Loan Queue will be funded first, followed by new loan approvals beginning on or before Dec. 28.

“This Administration and Congress recognize that these key programs were successful in helping jump-start the economic recovery for America’s small businesses,” said SBA Administrator Karen Mills. “The increased guarantee and reduced fees on SBA loans helped put more than $16.5 billion in the hands of small-business owners and brought more than 1,200 lenders back to SBA loan programs. The extension of these programs through February is important to continuing our path toward recovery, and will mean that thousands more small-business owners have access to the credit they need.

“Just two weeks ago, President Obama laid out key aspects of his jobs plan -- including significant ongoing support for small businesses. We will continue to work with Congress on moving those proposals forward -- including extending these loan enhancements as the President has called for, to ensure that small-business owners have the tools they need to drive economic growth and create jobs in communities all across the country.”

As part of ARRA, SBA received $730 million -- which included $375 million to increase the SBA guarantee on 7[a] loans to 90 percent, and to waive borrower fees on most 7[a] and 504 loans. The funds for these programs were exhausted on Nov. 23.

SBA created the Recovery Loan Queue as part of its transition back to pre-ARRA lending on Nov. 23, because previously approved loans are sometimes canceled or never disbursed for a variety of reasons. Eligible small businesses, in consultation with their lender, could choose to be placed in the queue for possible approval of an ARRA loan if funding became available. Currently, there are 1,069 loans totaling almost $530 million in the Recovery Loan Queue.

The extension included in the DOD bill authorizes the higher guarantee levels through Feb. 28, 2010. The fee relief is authorized until this additional funding is exhausted or the end of the fiscal year, whichever comes first. As was the case in November, SBA will transition into a queue system as the funds start to wind down, in order to ensure the maximum simulative effect of the programs and disbursement of funds.

For non-ARRA 7[a] or 504 loans funded during the transition period, this extension does not provide a retroactive guarantee or waived fees. Loans that were funded under non-ARRA terms cannot be canceled and resubmitted to take advantage of the ARRA extension provisions.

This extension does not affect other SBA ARRA programs -- including the America’s Recovery Capital [ARC] Loan Program, or the agency’s microloans. ARRA funding still remains for both of those programs.

SOURCES: Library of Congress, Recovery.gov, U.S. Small Business Administration
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