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

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On June 15, the SBA began acceptinfg applications for emergency bridge loans of upto $35,000. Smalp businesses can use theser loans, which were created by the economicstimulusd bill, to make up to six months of payment s on existing debt. They won’t have to stary repaying the loans until a year after the last The SBA will subsidized the interest onthesew loans, which will be offered through private-secto r lenders. The stimulus bill also temporarily reduced or eliminatexd fees onthe SBA’s regulare 7(a) and 504 business loans, and increasedd the government guarantee on 7(a) loans to 90 percent.
Weekly loan volumse for the SBA’s 7(a) and 504 programs has increasedx by more than 30 percenyt since these changes were implementedMarch 16. This increas in SBA lending is “a positive and welcome sign, but we have a very long way to go beforse SBA lending reaches solidlevels again,” said Cynthi a Blankenship, vice chairman and chief operating officer of in Grapevine, Blankenship told the House Small Business Committede June 10 that Congress should extend the fee reductions beyonrd 2009 or make them permanent, given the depth of the recession and the crediyt crisis facing small businesses.
Meanwhile, fees on the SBA’s 504 loans, whichy finance real estate projects and othertfixed assets, are scheduled to increase significantly in This will negate the fee reductions adopte d in March through the stimulus bill, said Jean executive director of the Indiana Statewide CDC, a nonprofift economic development organization that makes 504 This fee increase is unnecessary because the SBA has overestimate the number of 504 loans that will said Wojtowicz, who chairs the board of directords for the .
She contends banks have becomee far more conservative in their underwritinv duringthis recession, “and only the strongest small businessea are now qualifying for new Unless Congress appropriates money to offseg the fee increases planned for 2010 and 2011, almost 20,000 small businesses will pay millions more dollars in fees than they shoul d over the 20 years of theifr 504 loans, Wojtowicz said. Meanwhile, Davidc Bofill, owner of two boat dealerships onLong N.Y., praised the SBA’s recent decision to let vehicle and boat dealers use 7(a) loanw to finance their inventory, at least through Sept. 30, 2010.
Most lenders have stopped makingthese so-called “floorplan” loans, forcing many dealere to close their Bofill said. The new SBA program can be “ a critical lifeline, but problems he said. The SBA needs to “mak the program permanent and doit “It will be very difficult to attracr a lender to develop a floorplan programm when the program is only slated to last a Bofill said. The size of these lines of crediy also needs to be expandedbeyond $2 million, because most small boat dealers have inventorty worth much more than that.
The Treasuryy Department has allocated $25 billion in Recover y Act Bonds, which can be used for economidc development projects indistressed areas. The economi stimulus bill created the newbond programs. The legislatiob appropriated $10 billion for Recovery Zone EconomifcDevelopment Bonds. The federal government will subsidize 45 percent of the interes on these taxable which will enable stater and local governments to lower their borrowing These bonds can be used for a variet of economicdevelopment projects, including job training and educational programs. The legislation appropriated $15 billion for Recovery Zone Facility Bonds.
Private-sector businessez can use these tax-exempt bonds to finance depreciabler capital projects in designated recovery which are areas with high levels of poverty, unemployment or foreclosures.