SBA Transitions Loan Programs Away From Stimulus Subsidies
The Small Business Administration (SBA) is getting ready to transition many of their loans including their main 7(a) program away from the subsidies that were authorized by the American Recovery and Reinvestment Act. The stimulus measure had raised the subsidy to 90 percent from 75 percent until Feb. 28 and also eliminated borrower fees for both 7(a) and 504 loans through September or when the money runs out.
SBA has announced that the money from the Recovery Act will have been used by the end of February and that the agency is preparing a Recovery Loan Queue. Under the SBA plan, borrowers and their lenders who still want the stimulus-subsidized loans will be able to wait for money to become available from stimulus-backed loans that had been approved but canceled before they were financed. Also since SBA's legal authority to offer the 90 percent guarantee expires on Feb. 28, banks that require SBA approval will have to submit the loan application to the agency by this Saturday to be eligible. Beginning March 1, pending loans will be eligible only for the fee reduction.