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SBA eliminates some loan fees and raises guarantees

The U.S. Small Business Administration (SBA) is making it easier for small businesses to stay in business and to succeed.
According to SBA’s Acting Administrator Darryl K. Hairston, effective March 16, SBA began implementing two key provisions laid out in the newly signed Recovery Act. It is:
• Temporarily eliminating certain loan fees and
• Raising guarantees on some 7(a) loans to 90%.

In a press release, Hairston said, “With these critical steps by SBA, and the Treasury Department’s commitment of up to $15 billion aimed at getting lending markets flowing again, we are standing up with small business owners across this country and telling them how we are going to put much-needed capital in their hands.”

More specifically, the measures announced by the SBA include:
• Temporarily raising guarantees to up to 90 percent on SBA’s 7(a) loan program, through calendar year 2009, or until the funds are exhausted. This increase in guarantee levels will help provide banks with the greater confidence they need to extend credit during the current recession, will mean more capital available to small business owners around the country.
• Temporarily eliminating fees for borrowers on SBA 7(a) loans and for both borrowers and lenders on 504 Certified Development Company loans, through calendar year 2009, or until the funds are exhausted. This will mean more capital available to small businesses at a lower cost. The fee elimination is retroactive to February 17, the day the Recovery Act was signed. SBA is developing a mechanism for refunding fees paid on loans since then.

Hairston also said that the Treasury Department will commit up to $15 billion to help unlock the frozen credit markets by purchasing small business loan securities currently frozen on the secondary market. By purchasing these securities, it will unlock these secondary markets, and in turn, free up more capital to jumpstart lending for small business owners. The

SBA has worked closely with the Treasury Department to address the need to unlock these secondary markets for SBA loans.
Source: U.S. Small Business Administration, www.sba.gov.


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