Small Business Administration: Stimulus Bill Information
As the growth of small businesses is likely to be a major catalyst of the economy's reinvigoration, the stimulus bill provided additional funds to the Small Business Administration (SBA). The total funding provided to the SBA in the legislation totals $730 million, which allows the SBA to reduce its fees and increase the flexibility of its current SBIC and guarantee programs, while also creating a new program for businesses struggling to repay existing loan obligations.
90 Percent Guarantee: $375 million in funding - The stimulus bill allows the SBA to guarantee up to 90 percent of qualifying small business loans. If a business is eligible for a standard 7(a) loan, the SBA can now increase its loan guarantee from the previous level of 75 percent or 85 percent to 90 percent.
Business Stabilization Loans: $255 million in funding - This new SBA program will allow the SBA to provide deferred-payment loans of up to $35,000 to qualifying small businesses that have existing bank-issued loans and are struggling to make payments on that existing debt. The new loans, which can be used to make payments for up to six months, will be 100 percent guaranteed by the SBA and no repayment on them will be due for 12 months.
Microloans: $30 million in additional funding - The SBA's Microloan program makes funds available to nonprofit intermediary lenders, which can make loans of up to $35,000 to eligible small businesses.
Small Business Investment Company (SBIC): Increases flexibility of investments - Under the stimulus package, the SBIC program now allows its qualified fund managers to provide additional leverage to individual small businesses. Moreover, while raising the percentage that any one SBIC can invest in a single small business to 10 percent of its total capital, each SBIC must now invest 25 percent of its investment dollars in "smaller" businesses, up from the previous 20 percent threshold.
