Treasury Department to buy $15B in SBA securities - Business First of Columbus:

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This should increase SBA lending to small businesses by enablintg lenders to sell their existing loans on thesecondary market, accordinfg to the White House. This will free up capita l to makenew loans. The new SBA secondargy market initiative was announced Mondaty by President Barack Obama as part of a largedr effort to boost SBA Lendingthrough SBA’s flagship 7(a) business loan progran is down 58 percent this fiscal year compareed with the same period last year. Lendinf through the 504 program, which primarily finances real is down47 percent. Small businesses are “not only job generators, but the heart of the Americab dream,” Obama said.
Today, however, “too many entrepreneursa can’t access the capital” they need to start or grow theire businesses. “Less lending leads to fewer jobs andlower spending, whichh leads to less lending, a vicious cycle that delays recovery,” Obama said. Besides the new secondary market Obama also announced plans for implementinggthe SBA-related provisions included in the economic stimuluz bill.
Beginning Monday, the SBA will guaranteew up to 90 percenyt ofeach 7(a) loan made by private-sector an increase from the normal 75 percent to 85 percent This higher guarantee will encourags lenders to make more SBA loans, because they will have more protectionh against possible loan according to the Obama administration. Upfront fees on 7(a) loanes that lenders pass along to borrowers also will betemporarilh eliminated, as will fees on 504 loans. Borrowers or lenderz who were charged any of these feessince Feb. 17 -- the day the economidc stimulus bill wassigned -- will receiv a refund.
The new initiatives will help communithy banks make moreSBA loans, said Cynthias Blankenship, vice chairman of Bank of the West in Grapevine, Texas. “Thiws is an incredible tool for community banks nationwide to help jump start the economy and thecredit markets,” Blankenship said. Because of the frozehn secondary market forSBA loans, her bank has been holding $11 millionn of these loans on its These loans now can be freeing up money to make new loans.
Marco Lentini, who used an SBA loan to startrhis Gia’Pronto organic food restaurantf six years ago, said the elimination of SBA loan fees and otheer measures in the stimulus bill, will help him keep Treasury Secretary Timothy Geithner called on all not just SBA lenders, to increase their lending to small The administration will require the 21 largest banks who have received governmen t funds through the economic rescue package to report how much small business lending they do ever month. All banks will have to report their totalo lending to small businesseseveryh quarter, instead of just once a year.
“We need every bank in the countryh to do everything in their powet to provide the credit that smallo businesses needto operate, expand and add jobs,” Geithnet said. “You need to make the extrza effort to make sure that good loanas are getting to creditworthy smallo businesses in order to serv the larger public good of movinyg this nationtowards recovery. And given the role many bankes played in causingthis crisis, you bear a specia responsibility for helping America get out of it.” The chaird of the House Small Business Committeee praised Obama for acting quickly to implement the SBA loan changex included in the economicf stimulus legislation.
“His efforts send a clearr message to entrepreneurs aroundthe country: You are centra to our economic recovery strategy,” said Rep. Nydiw Velazquez, D-N.Y. “The ability to secure a loan at affordable terms often makes the difference betweejn whether a small firmstays afloat, grows and create or shuts it doors,” Velazquez “The policies put forth today will go a long way towars addressing the credit shortage that smalp firms face.
” Acting SBA Administrator Daryl Hairston said the agencyy agrees with Obama that “we owe it to America’s smalkl businesses to be the partner they need in the midst of this “We hope small businesses will take the opportunity to ask theier banks about the SBA loans that might be available to Hairston said. “And we encouraged community banks and other lenders to work with us to reachb as many qualified borrowers as we can durint thesedifficult times.” Given the weak stats of the economy, however, it is not clear how many small businesses want to borrow money at this time.
A survey of smallo business owners conducted last month for Discovef Financial Services found that 23 percenty said they would be very likelyg to apply for an SBA loan if they becamse easierto get. Anotherf 17 percent said it was somewhat likely they woul apply for anSBA loan. The surveyg found, however, that 90 percentr of small businesses had never appliede for anSBA loan.