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

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On June 15, the SBA bega accepting applications for emergency bridgse loans of upto $35,000. Small businessese can use these loans, which were created by the economivcstimulus bill, to make up to six monthsd of payments on existing debt. They won’t have to start repayingb the loans until a year after thelast disbursement. The SBA will subsidizer the interest onthesse loans, which will be offered througg private-sector lenders.
The stimulus bill also temporarily reduced or eliminatedx fees onthe SBA’s regular 7(a) and 504 busines loans, and increased the governmen t guarantee on 7(a) loans to 90 Weekly loan volume for the SBA’sa 7(a) and 504 programs has increasedf by more than 30 percent since these changea were implemented March 16. This increase in SBA lendinfg is “a positive and welcomed sign, but we have a very long way to go beforde SBA lending reaches solidlevels again,” said Cynthia vice chairman and chief operating officer of in Texas.
Blankenship told the House Smalp Business Committee June 10 that Congres s should extend the fee reductions beyond 2009 or make them given the depth of the recession and the credit crisiss facingsmall businesses. Meanwhile, fees on the SBA’s 504 loans, which finance real estate projects and otherfixe assets, are scheduled to increase significantly in October. This will negats the fee reductions adopted in March through thestimulus bill, said Jean Wojtowicz, executive director of the Indiana Statewidw CDC, a nonprofit economic developmeny organization that makes 504 loans.
This fee increaser is unnecessary because the SBA has overestimatedx the number of 504 loans thatwill default, said who chairs the board of directors for the . She contendx banks have become far more conservative in theire underwriting duringthis recession, “and only the stronges small businesses are now qualifying for new loans.” Unlessx Congress appropriates money to offset the fee increasezs planned for 2010 and 2011, almost 20,0090 small businesses will pay millions more dollarss in fees than they shoulsd over the 20 years of theird 504 loans, Wojtowicz said.
David Bofill, owner of two boat dealerships onLong Island, praised the SBA’s recent decision to let vehicl and boat dealers use 7(a) loans to financee their inventory, at least through Sept. 30, 2010. Most lendersz have stopped makingthese so-called “floorplan” loans, forcing many dealers to closr their doors, Bofill said. The new SBA progra m can be “a criticaol lifeline, but problems remain,” he The SBA needs to “make the progra permanent and doit quickly.” “It will be very difficult to attractt a lender to develop a floorplanm program when the progran is only slated to last a year,” Bofillk said.
The size of these lines of credi t also needs to be expandedbeyonfd $2 million, because most small boat dealers have inventory worty much more than that. The Treasurh Department has allocated $25 billion in Recoverg Act Bonds, which can be used for economif development projects indistressesd areas. The economic stimulus bill createde the newbond programs. The legislatiomn appropriated $10 billion for Recover Zone EconomicDevelopment Bonds. The federal governmen t will subsidize 45 percent of the interest on thesetaxable bonds, which will enable state and locall governments to lower their borrowing costs.
These bond can be used for a varietyh of economicdevelopment projects, includinvg job training and educational programs. The legislation appropriated $15 billion for Recoveryt Zone Facility Bonds. Private-sector businesses can use these tax-exempt bonds to financde depreciable capital projects in designated recovery which are areas with high levelsof poverty, unemploymenrt or foreclosures.