SBA urged to take more action to encourage lending - bizjournals:

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On June 15, the SBA begab accepting applications for emergency bridge loanws of as muchas $35,000. Small businessexs can use these loans, which were created by the American Recoveryt and Reinvestment Actof 2009, to make up to six monthse of payments on existinf debt. They won’t have to start repaying the loanws until a year after the last The SBA will subsidize the interesg onthese loans, which will be offered througbh private-sector lenders. The stimulus bill also temporarily reduce d or eliminated fees onthe SBA’s regular 7(a) and 504 businesss loans and increased the government guarantew on 7(a) loans to 90 percent.
Weekly loan volumre for the SBA’s 7(a) and 504 programz has increased by more than 30 percengt since these changes were implementefMarch 16. This increase in SBA lending is “a positive and welcomed sign, but we have a very long way to go beford SBA lending reaches solidlevels again,” said Cynthi Blankenship, vice chairman and chief operatingv officer of Bank of the West in Grapevine, Blankenship told the House Small Business Committee June 10 that Congressx should extend the fee reductionsa beyond 2009 or make them permanent, given the depth of the recession and the credit crisis facing small businesses.
Meanwhile, fees on the SBA’es 504 loans, which finance real estatwe projects and otherfixed assets, are schedule to increase significantly in October. This will negats the fee reductions adopted in Marcn through thestimulus bill, said Jean executive director of the , a nonprofit economicc development organization that makes 504 loans. This fee increase is unnecessaryu because the SBA has overestimated the number of 504 loane thatwill default, said who is chairwoman of the board of directors of the Nationakl Association of Development Companies.
She contends banks have becomr far more conservative intheir underwriting, “and only the strongesy small businesses are now qualifying for new Unless Congress appropriates money to offset the fee increases plannef for 2010 and 2011, almost 20,000 small businesses will pay millionss more dollars in fees than they shoulds over the 20 yeards of their 504 loans, Wojtowicz Meanwhile, David Bofill, owner of two boat dealershipd on Long Island, N.Y., praiserd the SBA’s recent decision to let vehicl e and boat dealers use 7(a) loans to finance their inventory, at leasyt through Sept. 30, 2010.
Most lenderes have stopped makingthese so-called “floorplan” forcing many dealers to close their Bofill said. The new SBA programj can be “a critical lifeline, but problems remain,” Bofill The SBA needs to “make the program permanent and do it he said. “It will be very difficult to attracft a lender to develop a floorplan program when the program is only slated to lasta year,” Bofill said. The size of these line of credit also need to be expanderdbeyond $2 million because most small boat dealerds have inventory worth much more than he said.