Millions in economic-stimulus dollars, along with eased restrictions on guaranteed loans, are boosting lending to small businesses nationwide by about 30 percent compared with the weeks prior to the recovery law’s passage, government officials say.
While the volume of loans approved by the Small Business Administration lags behind last year’s pace, the agency’s chief said Monday she’s optimistic because hundreds of banks that have stayed away from SBA programs in recent years are now partnering with the federal agency.
As a result, more than $4 billion has been steered to small enterprises since February. In Colorado, the regional SBA office has helped generate $67 million in lending; that’s compared with $135 million for the same period last year.
Surveys indicate the recession has hit small businesses hard. In testimony to Congress last month, American Express revealed that its delinquency rates for small- business credit customers have soared. The first quarter of 2009 was 70 percent higher than last year’s.
In March, Congress approved $730 million in additional funds to the SBA through the American Recovery and Reinvestment Act. At the same time, it mandated that the SBA lower its lending fees and guarantee larger portions of loans — up to 90 percent. The action came on the heels of lobbying by banks that called the fees too burdensome.
“The minute we (changed the rules), we saw a lift that’s now running at 30 percent,” said Karen Mills, the new administrator for the SBA.”This is what businesses and the banks needed.”
Seven Hills Veterinary Center in Aurora is among the Colorado operations reaping benefits. Dr. Mike Ley said the reduced fees saved his practice $50,000 on the cost of a $3.5 million loan he and his colleagues urgently needed to expand their business.
“It’s a big move for us — like going from an apartment to a house,” Ley said.
The SBA also is implementing some temporary programs with the help of stimulus money, Mills said. Starting this week, the SBA is making “bridge loans” of up to $35,000 available to small businesses facing hardships.
“Everything from a doctor’s office to a car-repair shop — many businesses have gotten their business credit lines pulled, and there’s not a lot of liquidity,” Mills said. “This will allow some to take this down or pay it off so they have $35,000 more in liquidity.”
Miles Moffeit: 303-954-1415 or mmoffeit@denverpost.com
