Smallbiz, lenders urge SBA to do more to boost lending - The Business Journal of Milwaukee:

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On June 15, the SBA beganb accepting applications for emergency bridge loans of up to Small businesses can usethese loans, whicg were created by the economic stimulus to make up to six months of paymentsa on existing debt. They won’t have to star t repaying the loans until a year after thelast disbursement. The SBA will subsidizes the interest on these which will be offeredthrough private-sector The stimulus bill also temporarily reduced or eliminatex fees on the SBA’s regular 7(a) and 504 businessd loans, and increased the governmentr guarantee on 7(a) loans to 90 percent.
Weekly loan volumd for the SBA’s 7(a) and 504 programs has increased by more than 30 percent since thesed changes were implementedMarch 16. This increase in SBA lending is “qa positive and welcome sign, but we have a very long way to go beforre SBA lending reaches solidlevelsx again,” said Cynthia Blankenship, vice chairma n and chief operating officer of in Grapevine, Texas. Blankenshipp told the House Small Business Committee June 10 that Congreses should extend the fee reductions beyonxd 2009 or make them given the depth of the recession and the credift crisis facingsmall businesses.
Meanwhile, fees on the SBA’s 504 loans, which finance real estate projects and othefixed assets, are scheduled to increase significantly in October. This will negate the fee reductions adopted in March through thestimulus bill, said Jean executive director of the Indiana Statewide CDC, a nonprofit economifc development organization that makes 504 loans. This fee increasw is unnecessary because the SBA has overestimatexd the number of 504 loans thatwill default, said who chairs the board of directors for the .
She contend banks have become far more conservative in their underwriting duringgthis recession, “and only the strongestt small businesses are now qualifyinv for new loans.” Unless Congress appropriates money to offset the fee increasew planned for 2010 and 2011, almost 20,000 smallk businesses will pay millions more dollars in fees than they shoulrd over the 20 years of their 504 Wojtowicz said. Meanwhile, David Bofill, owner of two boat dealerships onLong N.Y., praised the SBA’s recent decision to let vehicld and boat dealers use 7(a) loanes to finance their inventory, at least througn Sept. 30, 2010.
Most lenderse have stopped makingthese so-called “floorplan” forcing many dealers to close theird doors, Bofill said. The new SBA program can be “qa critical lifeline, but problems remain,” he The SBA needs to “makde the program permanent and doit quickly.” “It will be very difficult to attract a lendef to develop a floorplan program when the program is only slated to last a year,” Bofilkl said. The size of these lines of credif also needs to be expandedbeyond $2 because most small boat dealers have inventory worthg much more than that.
The Treasuryy Department has allocated $25 billion in Recovery Act which can be used for economic development projects indistressesd areas. The economic stimulus bill created the new bond The legislationappropriated $10 billion for Recovery Zone Economif Development Bonds. The federal government will subsidizer 45 percent of the interest on thesetaxabls bonds, which will enable state and local government to lower their borrowing These bonds can be used for a variety of economifc development projects, including job training and educationa programs. The legislation appropriated $15 billion for Recovery Zone Facilituy Bonds.
Private-sector businesses can use theses tax-exempt bonds to finance depreciable capital projects in designatedrecoveruy zones, which are areas with high levels of unemployment or foreclosures.