When the American Recovery and Reinvestment Act was announced back in February 2009, the SBA received $730 million of federal stimulus funding from the program. Loan demand soon gobbled up that funding, and in December, the SBA received an additional $125 million (I blogged about that extension on Small Business Trends last month).
SBA Administrator Karen Mills told BizJournals.com that the SBA was able to immediately get that money distributed to small businesses. However, the extension runs out at the end of February. President Obama has now called for extending the recovery act provisions for the SBA through September 30, 2010. The House has passed legislation that includes $323 million in funding for the extension; the Senate still needs to act on the proposal.
If the extension passes, Mills says the additional funds will be used to increase the loan limit for its 7(a) and 504 loan programs from $2 million to $5 million, and to extend the 90 percent guarantee on the 7(a) loan program. The Recovery Act raised those guarantees temporarily; it also temporarily eliminated fees for 7(a) borrowers and 504 borrowers and lenders.
When you add it up, there has been nearly $1 billion in new SBA lending-but entrepreneurs don’t seem to be acknowledging it. In a recent online poll, e-newsletter SmartBrief on Entrepreneurs asked its readers, “Which federal initiative has done the most to help entrepreneurs in general (if not you personally)?”
Just 13.1 percent chose “SBA reforms;” 80.36 percent said “None.” Stimulus contracts were cited by just 5.36 percent, and ARC loans by a measly 1.19 percent. In his analysis of the situation, SmartBrief on Entrepreneurs contributing editor and long-time small business journalist Bob Jones notes, “Although the Small Business Administration has been scrambling for a year now to boost lending, the agency seems to get little credit from business owners.”