On Monday, President Barack Obama announced plans to allocate economic stimulus funds to immediately reduce small-business lending fees and increase the government guarantee on some U.S. Small Business Administration (SBA) loans to 90 percent.
The plan will temporarily raise loan guarantees under the Small Business Administration’s 7(a) loan program to up to 90 percent and waive borrowing fees for many borrowers within the 504 Certified Development Company loans. The changes were made effective Monday.
“U.S. small businesses employ about half of our nation’s workers and over the last decade have created about 70 percent of all new jobs,” said Darryl K. Hairston, acting administrator of the SBA. “But their access to credit and lending markets has dried up, making it harder every day for small businesses to keep their doors open and their employees working.”
Additionally, the Obama administration announced Monday that the U.S. Treasury Department has committed up to $15 billion to purchase small business loan securities that are currently frozen in the secondary markets. The administration believes this action will unlock these markets and therefore free up additional capital to jumpstart small business lending.
“We hope that businesses will take the opportunity to ask their banks about the SBA loans that might be available to them,” Hairston said. “And we encourage community banks and other lenders to work with us to reach as many qualified borrowers as we can during these difficult times.”