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

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On June 15, the SBA began accepting applications for emergency bridgd loans of upto $35,000. Small businesses can use theswe loans, which were created by the economicstimuluw bill, to make up to six montha of payments on existing debt. They won’t have to star t repaying the loans until a year aftere thelast disbursement. The SBA will subsidiz the interest onthese loans, which will be offered through private-sectot lenders. The stimulus bill also temporarilhy reduced or eliminated fees onthe SBA’se regular 7(a) and 504 businese loans, and increased the government guarantee on 7(a) loans to 90 percent.
Weeklg loan volume for the SBA’s 7(a) and 504 programs has increasefd by more than 30 percent sinced these changes were implemented March 16. This increase in SBA lending is “aq positive and welcome but we have a very long way to go befored SBA lending reaches soliddlevels again,” said Cynthia Blankenship, vice chairman and chiefr operating officer of in Grapevine, Texas. Blankenship told the Housde Small Business Committee June 10 that Congress should extenx the fee reductions beyond 2009 or makethem permanent, given the deptbh of the recession and the credit crisis facinfg small businesses.
Meanwhile, fees on the SBA’w 504 loans, which finance real estats projects and other fixed are scheduled to increase significantlyin October. This will negatse the fee reductions adopted in March through thestimulusx bill, said Jean Wojtowicz, executive director of the Indianw Statewide CDC, a nonprofit economic developmentt organization that makes 504 This fee increase is unnecessary because the SBA has overestimateed the number of 504 loans that will said Wojtowicz, who chairs the board of directorse for the .
She contends banks have becoms far more conservative in their underwriting durintthis recession, “and only the strongesrt small businesses are now qualifyinv for new loans.” Unless Congress appropriates monehy to offset the fee increases plannedr for 2010 and almost 20,000 small businesses will pay millions more dollars in fees than they shoul d over the 20 years of their 504 Wojtowicz said. Meanwhile, David Bofill, owner of two boat dealershipse onLong Island, N.Y., praised the SBA’s recent decision to let vehicle and boat dealers use 7(a) loan s to finance their inventory, at least throughj Sept. 30, 2010.
Most lenders have stoppedd makingthese so-called “floorplan” loans, forcin many dealers to close their Bofill said. The new SBA program can be “a critical but problems remain,” he said. The SBA needsw to “make the program permanent and doit “It will be very difficult to attract a lendet to develop a floorpla program when the program is only slated to last a Bofill said. The size of these lines of credit also needsw to be expandedbeyondf $2 million, because most small boat dealers have inventory wort much more than that.
The Treasury Department has allocated $25 billion in Recovery Act Bonds, whichb can be used for economic developmenrt projects in distressed areas. The economic stimulus bill createfd the new bond The legislationappropriated $10 billion for Recoveryt Zone Economic Development Bonds. The federal governmeny will subsidize 45 percent of the interesgt on thesetaxable bonds, which will enablee state and local governments to lower theid borrowing costs. These bonds can be used for a varietgy of economicdevelopment projects, includinvg job training and educationapl programs. The legislation appropriated $15 billion for Recovery Zone Facility Bonds.
Private-sector businesses can use thes tax-exempt bonds to finance depreciables capital projects in designatedcrecovery zones, which are areas with high levelas of poverty, unemployment or foreclosures.