Posted by: Nick Leiber on February 5, 2010
This afternoon President Obama is proposing that Congress pass two temporary expansions of SBA lending programs, according to a White House official. These are both legislative proposals designed to help small businesses access credit. From the email:
1. Expand SBA’s existing program to temporarily support refinancing for owner-occupied commercial real estate loans: Eligible small businesses will have commercial first mortgage loans or existing 504 first mortgage loans that are maturing in the next year. In order to qualify, businesses will have to be current on all loan payments for the previous year. Lenders that are refinancing mortgages for existing customers will make a loan for up to 70 percent of the current property value; and SBA will help finance the remaining 20 percent. For new lenders taking on a refinancing project, SBA will take on a greater share of financing, up to 40 percent. SBA’s proposal for a temporary, zero-subsidy CRE refinancing program would be funded through additional fees for refinancing projects, not through a Congressional appropriation. This proposal will help refinance up to $18.7 billion each year in commercial real estate that might otherwise be foreclosed and liquidated.
2. Temporarily increase the cap on SBA Express loans from $350,000 to $1 million:
The President is proposing to temporarily increase the maximum SBA Express loan size to $1 million, which would expand the program’s ability to help a broad range of small businesses. Unlike traditional 7(a) loans, lenders can use their own paperwork for SBA Express loans, which can be structured as revolving lines of credit. Currently, these Express loans are capped at $350,000 and carry a 50 percent guarantee. Fees would cover virtually all of the added costs of this proposal.
Today’s proposals follow announcements the president and Treasury officials made earlier this week, including a push for the creation of $30 billion fund for community banks and a separate initiative that will use up to $1 billion to provide low-cost capital to Community Development Financial Institutions.