Stimulus Funding for SBA Loans Runs Out—Again

Photo by SBA.

In a case of legislative déjà vu, the Small Business Administration has announced that funding for two popular lending programs is on the verge of running out – again, Emily Maltby reports in the WSJ.

The government agency has encouraged lenders to make more loans to Main Street businesses by reducing the fees and by offering a 90% guarantee to banks that make SBA loans. The original $375 million in funding for these two measures, enacted as part of last February’s stimulus bill, first ran dry last November. By mid-December, another $125 million was appropriated to continue the program through February 2010.

SBA Administrator Karen Mills released a statement indicating that the funds “will be used faster than expected” and that “loan volume has surged since earlier this week,” when the agency reminded lenders that the program would expire at the end of the month.

In response to the surge, the SBA announced that it will once again activate a loan queue. Per the protocol from last November, loans will be accepted one at a time as previously-approved loans fail to disburse or cancel. This process, according to the administrator’s statement, will “ensure that every remaining dollar possible is made available.”

Photo by SBA.

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