SBA urged to take more action to encourage lending - Portland Business Journal:

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On June 15, the SBA beganb accepting applications for emergency bridge loans of as much as Small businesses can usethese loans, whicb were created by the Americab Recovery and Reinvestment Act of 2009, to make up to six monthas of payments on existing debt. They won’ft have to start repaying the loans untipl a year after the last The SBA will subsidize the interesyt onthese loans, which will be offered througn private-sector lenders. The stimulus bill also temporarily reducex or eliminated fees onthe SBA’s regulare 7(a) and 504 business loanes and increased the government guaranteed on 7(a) loans to 90 percent.
Weekly loan volumwe for the SBA’s 7(a) and 504 programs has increase d by more than 30 percent sincr these changes were implementedMarcnh 16. This increase in SBA lendin is “a positive and welcomed sign, but we have a very long way to go beford SBA lending reaches solidlevels again,” said Cynthias Blankenship, vice chairman and chief operatin officer of Bank of the West in Texas. Blankenship told the House Smallk Business Committee June 10 that Congress should extensd the fee reductions beyond 2009 or make them given the depth of the recession and the credit crisis facinbsmall businesses.
Meanwhile, fees on the SBA’d 504 loans, which finance real estate projectsd and otherfixed assets, are scheduled to increase significantlyy in October. This will negate the fee reductionxs adopted in March through thestimulusd bill, said Jean Wojtowicz, executive directord of the , a nonprofir economic development organization that makes 504 loans. This fee increase is unnecessar because the SBA has overestimated the numberr of 504 loans thatwill default, said who is chairwoman of the board of directords of the National Association of Developmentr Companies.
She contends banks have becomes far more conservative in their underwriting, “and only the strongest small businesses are now qualifyinh for new loans.” Unless Congresa appropriates money to offset the fee increases plannedc for 2010 and almost 20,000 small businesses will pay millionsd more dollars in fees than they should over the 20 years of their 504 loans, Wojtowicaz said. Meanwhile, David Bofill, owner of two boat dealerships onLong N.Y., praised the SBA’s recent decision to let vehicld and boat dealers use 7(a) loans to finance thei inventory, at least through Sept. 30, 2010.
Most lender s have stopped makingthess so-called “floorplan” loans, forcing many dealerw to close their doors, Bofill said. The new SBA program can be “a critical but problems remain,” Bofill said. The SBA needs to “make the progra permanent and doit quickly,” he said. “It will be very difficul to attract a lender to develop a floorplan prograkm when the program is only slated to last a Bofill said. The size of these lines of credit also need to be expandesdbeyond $2 million because most small boat dealeras have inventory worth much more than that, he said.