Many business owners have sought out a small business loan for the growth and expansion of their company, since small business loans can be used for a wide range of purposes like buying equipment or adding to the business’s workforce. As of late, the Small Business Administration has been paying a higher percentage of many small business loans made from lenders and this has been done with funding provided through stimulus program money. Higher guarantees caused lenders to be more willing to make small business loans as a result of this coverage by the SBA.
However, bonus funds recently ran out for the SBA to guarantee a higher percentage of small business loans and, in some cases, waive fees for these loans, so there has been a decrease in lending to small businesses. Yet, the fact that the Small Business Administration cannot guarantee a higher percentage of SBA loans made from various lenders, does not mean that these types of loans are not available.
Typically, the Small Business Administration has, with past stimulus funding, been able to guarantee up to 90% of a small business loan and eliminate fees as well. However, since funding for this type of coverage has expired, there are many lenders who are unwilling to make loans to small businesses due to the fact that there is a lower percentage guaranteed on traditional SBA loans.
There is legislation in the works that may increase the enhanced loan conditions for small business borrowers. However, at the present time the funds that have been exhausted have created a condition where borrowing has dropped since many businesses and lenders want to take advantage of these loans with a higher guarantee percentage and no fees.
Yet, any small business owner who may be looking for capital to increase their businesses productivity, expand their operations, or hire a greater workforce can still obtain a Small Business Administration loan, only at the present time, these will be under traditional conditions. While it is likely, many feel, that there will be an extension of the enhanced benefits on SBA loans, at the present time there are still borrowing options, for businesses who qualify, from the Small Business Administration.