The Small company Administration has been charged with helping businesses weather the recession, and money is running out. The 7(a) lending program provides loans to small businesses around the country. The program, which was funded by the American Recovery and Reinvestment Act, is at the moment in a holding pattern, waiting for more money.
Resource for this article: SBA running out of low cost loans to companies by Personal Money Store
Low cost loans provided by the SBA
The SBA isn't actually the company to give money to business owners. The Government agency will back up loans made by banks. With the SBA “insurance policy” against default in place, banks are much more willing to act as private money lenders to small businesses. The stimulus package that was authorized the SBA to waive fees and guarantee up to 90 percent of a loan’s value.
The SBA loans effect
Small companies rely on credit to keep their companies going. Over just a three-month period of April, May and June, the SBA lent out $ 3 billion over 12,123 loans. Compared to the very same quarter of last year, that is 21 percent more pay day for cash-strapped companies. The program, nevertheless, is still waiting for re-authorization, which is leaving millions of dollars of loans in limbo.
SBA and his loan queue
Since the official authorization for SBA loans expired in May, the agency has been forced to queue requests for loans. There are presently 419 borrowers waiting for around $ 123 million in SBA-guaranteed funding. Because these SBA loans are often one of the very few types of credit that are accessible to these companies, the agency is scrambling to help them find financing. Given the length of the recession thus far and the fact the economy is not yet growing at a steady pace, it is almost for certain that programs like the SBA 7(a) program will have to continue providing support for small company.
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