The SBA is preparing to transition back to loans with lower guarantees and higher fees as the fund for those programs established by the American Recovery and Reinvestment Act (ARRA) runs out and the February 28 authorization for the programs expires. The funds allowed the SBA to raise the guarantee on many loans from 75 percent to 90 percent to incent lenders to make more loans; likewise, the funds were used to offset a decrease in borrower fees to entice small businesses to seek credit.
As part of the transition back to the previous terms, the SBA is re-activating the Recovery Loan Queues. Sometimes previously approved loans are later cancelled or never disbursed for a variety of reasons. The Queues take this into account and allow eligible small businesses, in consultation with their lenders, to choose to be placed in the queue for possible approval for an ARRA loan if funding becomes available. Small business owners and lenders have transparent access to the queue via http://www.sba.gov/recoveryq and can remove themselves from the queue at any time.
There’s still a chance that Congress could reauthorize the stimulus-back loans, but Senate Majority Leader Harry Reid did not include them in the recent jobs bill. More on this later . . .