Info on extension of the AARA:
Key Points:
- President Obama signed an extension of $125 million to continue the increased guarantee and reduced fees made possible under the Recovery Act through Feb. 28, 2010.
- This Administration and Congress recognize that these key programs were successful in helping jump-start the economic recovery for America’s small businesses. The increased guarantee and reduced fees on SBA loans were a powerful combination that put more than $16.5 billion in the hands of small business owners and brought more than 1,200 lenders back to SBA loan programs.
- The additional funding will support $4.5 billion in small business lending.
- SBA will most likely restart Recovery loan approvals by December 28, 2009.
Implementation of Recovery Act Extension:
- New approvals of loans with the higher guarantee and reduced fees made possible by the Recovery Act will begin most likely by December 28.
- Loan applications from borrowers who chose to be placed in the SBA’s Recovery Loan Queue will be funded first, followed by new loan approvals beginning on or before December 28.
- The extension authorizes the higher guarantee levels through Feb. 28, 2010. The fee relief is authorized until this additional funding is exhausted or the end of the fiscal year, whichever comes first. As was the case in November, SBA will transition into a queue system as the funds start to wind down in order to ensure the maximum simulative effect of the programs and disbursement of funds.
- For non-Recovery Act 7(a) or 504 loans funded during the transition period, this extension does not provide a retroactive guarantee or waived fees. Loans that were funded under non-Recovery Act terms cannot be canceled and resubmitted to take advantage of the Recovery Act extension provisions.
Background on the Recovery Act and Recovery Loan Queue:
- As part of the Recovery Act, SBA received $730 million, which included $375 million of that went to increase the SBA guarantee on most 7(a) loans to 90% and to waive borrower fees on most 7(a) and 504 loans. The funds for these programs were exhausted on Nov. 23, 2009.
- Because previously approved loans are sometimes cancelled or never disbursed for a variety of reasons, SBA created the Recovery Loan Queue as part of its transition back to pre-ARRA lending on Nov. 23. Eligible small businesses, in consultation with their lender, could choose to be placed in the queue for possible approval of an ARRA loan if funding became available.
- As of December 21, 2009, there were 1,069 loans totaling almost $530 million in the Recovery Loan Queue.
- This extension does not affect other SBA Recovery Act programs, such as ARC and microloans, which still have funding.
President’s Extension Request:
- Recently, President Obama laid out key aspects of his jobs plan, including significant continued support for small businesses.
- The SBA will continue to work with Congress on moving those proposals forward, including extending these loan enhancements as the President has requested, to ensure that small business owners have the tools they need to continue to drive economic growth and create jobs in communities all across the country.
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