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News Now

Washington
SBA expands eligibility for 7a loans
WASHINGTON (5/4/09)--The Small Business Administration (SBA) has expanded the eligibility for 7(a) loans, effective this week through Sept. 30, 2010. As a result of the change, SBA expects that more than 70,000 additional small businesses could be eligible for the loans. The temporary 7(a) loan size standard will parallel the standard for the agency’s 504 Certified Development Company loan, and will allow businesses to qualify based on net worth and average income. The net worth for the company and its affiliates cannot exceed $8.5 million and average net income after federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years cannot exceed $3 million. “This is just one more step we are taking to make sure small businesses have access to capital to keep their doors open and employees working during these tough economic times,” SBA Administrator Karen Mills said. “We have seen signs that small businesses that are just outside the traditional 7(a) size standard are being shut out of the conventional lending market. This temporary change will help those businesses weather these tough times and help move our nation closer to economic recovery.” With the change, more small businesses also can receive benefits made possible through the Recovery Act. On March 16, the SBA implemented two key provisions of the Recovery Act that raised the guarantee on 7(a) loans to 90 percent and reduced fees for borrowers. Since then, average weekly 7(a) loan volume has increased by more than 25% and new SBA loans made by nearly 450 lenders who had not made loans since October 2008. Credit unions are ready to help the nation’s small businesses jumpstart the economy, Credit Union National Association President/CEO Dan Mica has said. CUNA has been in regular contact in recent years with the SBA urging the agency to remove structural roadblocks to programs like its 7 (a) guaranteed lending program to enable more credit unions to participate. As of December, 204 credit unions had SBA loans outstanding. Credit unions have 7,096 loans with a balance of $519,308,696. The average loan size is $73,183, according to CUNA research.


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