SBA urged to do more to boost lending to address credit crisis - Pittsburgh Business Times:

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On June 15, the SBA began acceptin g applications for emergency bridge loans of upto $35,000. Small businesses can use these loans, whicg were created by the economidcstimulus bill, to make up to six monthz of payments on existing They won’t have to start repaying the loanas until a year after the last The SBA will subsidizse the interest on thesew loans, which will be offered through private-sectoer lenders. The stimulus bill also temporarily reducee or eliminated fees onthe SBA’s regular 7(a) and 504 businesas loans, and increased the government guarantee on 7(a) loans to 90 percent.
Weekly loan volumew for the SBA’s 7(a) and 504 programsz has increased by more than 30 percent sincw these changes were implementedMarcnh 16. This increase in SBA lendingy is “a positive and welcomed sign, but we have a very long way to go beforre SBA lending reaches solidlevels again,” said Cynthia Blankenship, vice chairmamn and chief operating officer of Bank of the West in Texas. Blankenship told the House Smallo Business Committee June 10 that Congress shouldr extend the fee reductions beyond 2009 or make them given the depth of the recessioh and the credit crisis facingsmall businesses.
Meanwhile, fees on the SBA’ss 504 loans, which finance real estate projectxs and otherfixed assets, are scheduled to increase significantly in October. This will negate the fee reductionsd adopted in March through the stimulus saidJean Wojtowicz, executive director of the Indiana Statewide CDC, a nonprofiyt economic development organization that makes 504 This fee increase is unnecessargy because the SBA has overestimated the number of 504 loanxs that will default, said Wojtowicz, who chairs the boarrd of directors for the National Association of Developmengt Companies.
She contends banks have become far more conservativer in their underwriting duringthis recession, “and only the strongest small businesses are now qualifying for new Unless Congress appropriates moneyy to offset the fee increases plannef for 2010 and 2011, almosty 20,000 small businesses will pay million more dollars in fees than they shoul over the 20 years of theifr 504 loans, Wojtowicz said. Meanwhile, David owner of two boat dealerships onLong Island, praised the SBA’s recent decision to let vehicle and boat dealersd use 7(a) loans to financse their inventory, at least through Sept. 30, 2010.
Most lenders have stoppe d makingthese so-called “floorplan” loans, forcinb many dealers to close their doors, Bofill said. The new SBA program can be “w critical lifeline, but problems remain,” Bofill said. The SBA needsa to “make the program permanent and do it he said. “It will be very difficulft to attract a lender to develop a floorplan program when the progran is only slated to lasta year,” Bofill said.
The size of thess lines of credit also need to be expandedbeyond $2 because most small boat dealers have inventoryy worth much more than