The U.S. Senate approved legislation to cut taxes and ease credit for small businesses in a long-delayed victory for Democrats eager to show voters they are working to create jobs. If the U.S. House passes the bill as expected as early as next Wednesday, it would head to President Barack Obama to sign into law by perhaps the end of next week.
“This bill contains significant enhancements to the SBA program,” noted Michael D. Sneden, Executive Vice President of ValueXpress. “These improved SBA provisions are contained in the ‘Small Business Access to Credit’ section that has been awaiting approval since spring. We expect a significant increase in SBA loan volume as we immediately switch about 12 loans that we have in limbo into the enhanced 7(a) and 504 programs.”
Specifically, if the bill is approved as drafted, the following improvements will be in effect for the SBA program:
• Extends the authority for the SBA to offer 90% guarantees (versus a standard 75%) on SBA 7(a) loans through December 31, 2010 or until $505 million in appropriations is obligated;
• Extends the authority for the SBA to waive SBA guarantee fees on SBA 7(a) loans through December 31, 2010 or until $505 million in appropriations is obligated;
• Extends the authority for the SBA to waive a 0.50% fee on the
first mortgage balance on SBA 504 loans through December 31, 2010;
• Permanently increases the maximum loan amount to $5 million
on SBA 7(a) loans, with a standard maximum guarantee of 75% ($3.75 million) and a temporary guarantee of 90% ($4.5 million);
• Permanently increases the maximum loan amount to $5 million
on SBA 504 loans. Assuming a typical 50% conventional first mortgage and 40% SBA 504 loan on a general-purpose building, a $12,000,000 maximum combined conventional/SBA 504 loan can be achieved; and
• Allows SBA 504 loans to be used to refinance short-term real
estate debt into long-term, fixed-rate loans
“We are immediately increasing our SBA loan limits to correspond to the new limits,” said Sneden. “Next week we begin processing loans at the new levels in anticipation of the bill becoming law.”
