Recently, the Obama administration announced several steps by the Small Business Administration and the U.S. Department of Treasury to address the economic challenges facing small businesses and entrepreneurs across the country.
Small businesses in the U.S. employ about half of the nation’s workers and over the last decade have created about 70 percent of all new jobs. But their access to credit and lending markets has dried up, making it harder every day to keep their doors open and their employees working.
American small businesses are one of the strongest engines for economic prosperity in the world and will be the catalyst for much of the economic recovery. The Small Business Recovery Act takes a comprehensive approach to several problems facing small business today. The act:
■ Provides entrepreneurs and lenders financial relief from the current economic crisis that will help encourage borrowing and lending to all small businesses, including start-ups.
■ Offers business access to the capital and the tools they need to drive economic recovery and to create and retain jobs.
■ Helps unlock credit markets for small business.
Smart Business spoke to Darlene Nowak-Baker, executive vice president, commercial lending, First Place Bank, about what the SBA Recovery Act means to the health of small businesses and how companies can reap the benefits.
What do businesses need to know about the SBA Recovery Act?
The two key provisions of the SBA Recovery Act will, one, temporarily eliminate certain loan fees and, two, raise guarantees on some 7(a) loans up to 90 percent. The elimination of the fees for borrowers on SBA 7(a) loans and for both borrowers and lenders on 504 Certified Development Company loans through calendar 2009 will make more capital available to small businesses at a lower cost.
In addition, the increase in guarantee levels to 90 percent will provide banks with the greater confidence they need to extend credit during the current recession.
