SBA lending slips as stimulus cash dries up

chart_sba_backed_loans.top.gif By Catherine Clifford, staff reporter


NEW YORK (CNNMoney.com) -- Stimulus money helped revive the government's small business lending program after the recession threw it into a near freeze. But this quarter, as the bonus funds ran out, the program's growth again began to stall.

The SBA's flagship 7(a) lending program backed 12,123 loans totaling just shy of $3 billion in the three-month period that ended Wednesday. That's a 7% increase from the number of loans made in the same quarter last year, and a 21% jump in the total dollars lent out.

But compared to the first three months of 2010, lending pulled back quite a bit. The number of loans backed by the program fell 27% from the prior quarter, when the SBA processed 16,558 loans totaling $3.7 billion.

Volume through the quarter was noticeably choppy, and dried up in June after money for additional lending incentives ran out.

The SBA's primary lending program doesn't make direct loans; instead, it backs loans made by banks, insuring a portion of each loan against default. As part of the Recovery Act passed in February 2009, Congress set up a funding pool that let the SBA temporarily eliminate fees for its loans and increase the portion of each loan that the government guarantees to as much as 90%.

The SBA has run out of the money Congress allocated for the stimulus provisions four times: in November, February, March, and a month ago at the end of May. Each previous time, Congress allocated more cash to keep the incentives going, but in May it let them lapse.

The effect was quick and dramatic. In the 10-day period from May 21 to May 31 -- when lenders knew the funding was on the verge of running out -- the SBA processed 2,042 loans totaling $729.5 million.

After that, loans carried fees and lower guarantees. In the week of June 4 to June 11, the SBA processed 529 loans, totaling $99.2 million.

Lenders are hoping Congress will bring back the bucks. The SBA is currently running a waiting list, the Recovery Act Queue, for borrowers interested in getting a loan under the enhanced loan conditions should money become available again. The queue currently has 419 borrowers in line, requesting more than $123 million in funding.

"This is a top priority for the agency," SBA spokesman Jonathan Swain said of the agency's push to revive the stimulus incentives. "These programs have been very successful boosting the availability of credit for small businesses."

The House and the Senate have been shuffling various small business proposals back and forth, but have not yet synched up to pass any of them. In the most recent legislation, a small business jobs bill introduced in the Senate on Tuesday, the SBA's Recovery Act benefits would be extended through December of this year.

Correction: An earlier version of this story incorrectly stated the SBA's loan dollar volume in May and June. The correct figure is that the SBA processed $729.5 million loans from May 21 - May 31 and $99.2 million from June 4 - June 11.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Questions & Answers



QHow does a florist sell more in this economy? We changed our business to designing weddings and events only, as the everyday flowers are not selling. We had to throw out too much product at the end of the week -- flowers are perishable! More
Get Answer
- The Flower Lady, Suwanee, Ga.
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.32%4.26%
15 yr fixed3.36%3.27%
5/1 ARM3.37%3.27%
30 yr refi4.31%4.24%
15 yr refi3.34%3.25%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Sponsors

Sections

Spencer has been a supporting member of the "Good Morning America" cast for the past three years. More

Obamacare sign ups hit 8 million, though final enrollment remains to be seen. More

Office for iPad move is a symbolic victory for Nadella's Microsoft, but the company is still weighed down by many of the same old issues. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

As Detroit moves closer to reaching a bankruptcy deal, retired civilian workers are poised to be left worse off than firemen and police officers. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.