SBA lending provision faces expiration

Unless Congress votes to extend it, a key small-business lending provision in the Small Business Jobs Act will expire after Dec. 31.

The Jobs Act of 2010, passed in September by Congress, included an increase in the U.S. Small Business Administration’s ability to provide loan guarantees of up to 90 percent, along with a reduction in fees.

But the provision is due to sunset after Dec. 31, when SBA guarantees will drop to the previous limit of 75 percent.

“There’s no question that certain deals won’t get done after Jan. 1,” said Witmer Jones, SBA district director for New Hampshire. “But our most popular program, SBA Express (which currently provides loans up to $1 million with an accelerated turnaround time), didn’t have an increased guarantee and remained at 50 percent.”

To extend or make the 90 percent guarantee provision permanent “would require a supplemental appropriation,” said Jones.

With the political climate changing in Washington and an increased focus on cutting federal spending, he said he did not know whether such a measure would pass or not.

Jones said it was hard to tell if there had been a spike in loans directly due to the Jobs Act, since the American Recovery and Reinvestment Act of 2009, or ARRA, also included support for SBA lending programs.

The funds ran out several times, but supplemental appropriations were approved until the Jobs Act provided a bit more stability.

But other small-business provisions in the Jobs Act will be winding down in coming months and years without intervention:

• SBA Express loan limits were increased to $1 million but will drop back to $350,000 on Sept. 27, 2011.

• The refinancing of owner-occupied commercial real estate mortgages into the 504 loan program will expire on Sept. 27, 2011.

• The Dealer Floor Plan Pilot program – which aids small-businesses owners who sell cars, RVs, boats and other titleable inventory – was to expire on Sept. 30, 2010. This was extended and expanded to 2013. Jones said the expansion of the pilot has yet to be implemented. – CINDY KIBBE/NEW HAMPSHIRE BUSINESS REVIEW