Wednesday, February 18, 2009

09-10 SBA Programs and the American Recovery Act

Release Date: February 18, 2009
Contact: Mike Stamler (202) 205-6919
Release Number: 09-10
Internet Address:

SBA Applauds Stimulus Bill, Planning Underway For Broadest, Quickest Small Business Impact
WASHINGTON – The American Recovery and Reinvestment Act contains a package of loan fee reductions, higher guarantees, new SBA programs, secondary market incentives, and enhancements to current SBA programs that will help unlock credit markets and begin economic recovery for the nation’s small business sector.

"The tax incentives and credit stimulus elements of the Recovery Act will truly help small business owners affected by the credit crunch, and will provide financing opportunities to help them create new jobs in their communities," said Acting SBA Administrator Darryl K. Hairston.
"There’s a lot to digest in the legislation, and SBA has established teams to tackle a wide variety of policy decisions, system modifications, regulatory changes, legal requirements, and new program launches authorized by the President and Congress," said Hairston.

The bill provides $730 million to SBA and makes changes to the agency’s lending and investment programs so that they can reach more small businesses that need help. The funding includes:
  • $375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares, up to 90 percent for certain loans
  • $255 million for a new loan program to help small businesses meet existing debt payments
  • $30 million for expanding SBA’s Microloan program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to microlenders
  • $20 million for technology systems to streamline SBA’s lending and oversight processes
  • $15 million for expanding SBA’s Surety Bond Guarantee program
  • $25 million for staffing up to meet demands for new programs
  • $10 million for the Office of Inspector General.
The bill also authorizes refinancing for certain SBA loans so borrowers can expand their businesses on favorable terms, and expands leverage capability for Small Business Investment Companies.

"We are going to be part of the solution, and this bill gives us specific tools to make it easier and less expensive for small businesses to get loans, give lenders new incentives to make more loans, and help restore healthy SBA secondary markets to boost liquidity," Hairston said, noting also that more details on implementation will be coming over the next few weeks.

The stimulus bill takes a comprehensive approach and attacks several problems facing small businesses at once by reducing fees, guaranteeing a greater share of certain loans, expanding capacity in the Microloan program, providing new loans to help small businesses keep their doors open through economic hardship, as well as new mechanisms to help unfreeze the secondary markets for SBA-backed loans.

Declines in SBA lending volume last year, which are continuing in FY 2009, reflect problems in the broader credit markets, and present hurdles to small businesses that are seeking credit in the current economy. The financial crisis has created a variety of conditions that impact small businesses, including a lack of liquidity in the banking system, a reluctance of many lenders to extend new loans, tightened credit standards, weaker finances at small businesses, and uncertainty about taking on new debt on the part of many entrepreneurs.

The Recovery Act addresses small businesses’ lending problems, and addresses key investment and contracting issues. The bill helps Small Business Investment Companies better leverage investment capital to reach more small companies. The bill also increases the current contract limit for SBA’s Surety Bond Guarantee program, which will help small businesses compete for contracts.

90 Percent Guarantee
The bill allows SBA to raise its loan guarantee from the current levels to as much as 90 percent for some loans. At present, SBA can guarantee loans up to 85 percent on loans up to $150,000, and up to 75 percent on loans greater than $150,000. The 50 percent guarantee on SBA Express loans would remain unchanged. Increasing the SBA guarantee percentage will encourage lenders to extend more capital to small businesses by increasing the share covered by an SBA guarantee.

Business Stabilization Loans
The bill creates a new SBA loan program to provide deferred-payment loans of up to $35,000 to viable small businesses that need the money to make payments on an existing, qualifying loan for up to six months. These loans will be 100 percent guaranteed by SBA. Repayment would not have to begin until 12 months after the loan is fully disbursed. The bill provides $255 million for this new program. These loans will help ensure that small businesses have time to re-focus their business plans in order to succeed in the long run.

The bill expands SBA’s Microloan program, which provides small loans (up to
$35,000) paired with technical assistance to start-up, newly established or growing small businesses. The bill provides funding to increase loans from SBA to participating Microlenders by $50 million through September 30, 2010, and adds $24 million in grants to provide technical assistance to borrowers.

Historically, these loans reach low-income individuals, women and minorities in both rural and urban areas. Expanding this program through the stimulus bill will help ensure these entrepreneurs are not left behind in the credit crunch.

The bill also gives SBA the power to use the 504 Certified Development Company program to refinance existing loans for fixed assets, providing fresh support for small business expansion. This change will help business owners expand their current development projects and create jobs in their communities.

Secondary Market Expansion
The bill authorizes SBA to establish a secondary market for pools of "first lien" loans under the 504 program. These "first lien" loans from commercial lenders currently have no SBA guarantee. The bill authorizes SBA to deploy federal guarantees for pools of these first lien loans, so that they can be sold to investors in a secondary market. Providing liquidity for these first mortgages will help encourage lenders to continue participating in SBA’s 504 loan program, which provides a key source of capital for community development and other projects.
The bill also empowers SBA to set up a Secondary Market Lending Authority that would make direct loans to broker-dealers that participate in the secondary market for SBA-guaranteed 7(a) loans. These broker-dealers would use the funds to purchase SBA-backed loans from commercial lenders, assemble them into pools and sell them to investors in the secondary loan market. This program may help address some of the issues facing the secondary market for SBA loans and may ultimately help SBA lenders make new loans to borrowers.

Investment Program
The bill helps SBA-licensed Small Business Investment Companies (SBICs) and families of SBIC funds better leverage the capital they use to invest in small businesses. The bill sets maximum levels of funding the agency can provide to these companies at up to three times the private capital raised by those companies, or $150 million, whichever is less. It also raises the percentage any one SBIC can invest in a single small business to 10 percent of total capital, and raises from 20 percent to 25 percent the percentage of any licensee’s dollar investments that must be made in "smaller" businesses.

Surety Bonds
The bill also raises the maximum contract amount that can be covered by an SBA guaranteed surety bond from $2 million to $5 million, and, under certain circumstances, for contracts amounting to $10 million, and provides additional funds to cover the costs of expanding this program. Small businesses need surety bonds in order to bid on and obtain many federal and other contracts.

SBA guarantees surety bonds to small businesses that private surety companies would not otherwise be able to extend.

Thursday, February 12, 2009

The Small Business Economy: A Report to the President 2008

The 2008 edition of The Small Business Economy documents the small business role in the economy of 2007 and includes chapters focusing on financing, procurement, international trade, small business training and development, tax policy, business creation, and regulation.

A copy of the report is located at: and the research summary can be found at:

Should you need further information, please feel free to contact

Exports are a Bright Spot in Economic Downturn

Exports are a Bright Spot in Economic Downturn
Report Documents Small Firms’ Role in Economy

WASHINGTON, D.C. – A better market for U.S. exports was the highlight of the fading economy of 2007, according to The Small Business Economy report released today by the U.S. Small Business Administration’s Office of Advocacy. Small businesses, like other firms, faced growing challenges, as housing starts fell and energy prices increased. A year that showed strong growth in the second and third quarters ended with fourth quarter growth down an annualized 0.2 percent. The economy still generated 1.1 million net new jobs, largely in the service sectors populated in large part by small firms. Small firms continued to lead job growth in the first quarter, creating 74 percent of the net new jobs; by the fourth quarter, firms of all sizes were shedding jobs. Many of these trends continued into 2008.

"The export market was a highlight of the 2007 economy, driven by a drop in the dollar’s value against other currencies," said Advocacy Chief Economist Chad Moutray. "This report reviews changes in the economy of 2007 and also showcases new research by economists on the small business role in the economy, including exporting."

Moutray released the report at the Small Business Congress of the National Small Business Association in Fort Lauderdale, Florida. The 2008 edition of The Small Business Economy: A Report to the President, is the latest in the Office of Advocacy’s annual research reports.

The report reviews the economic environment for small businesses in the year 2007, including the financial and federal procurement marketplaces. New research focuses on small businesses in international trade, small business training and development, tax policy, and business creation, including startup activities and the launch of new ventures. Other chapters and appendices provide data on small business and an update on Office of Advocacy initiatives.

The Office of Advocacy, the "small business watchdog" of the federal government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats, and it funds research into small business issues.

For more information and a complete copy of the report, visit the Office of Advocacy website at Print copies are also available upon request to the Office of Advocacy (202) 205-6533.

The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, interests of small business before Congress, the White House, federal agencies, federal courts, and state policy makers. For more information, visit, or call (202) 205-6533.

To sign up for Advocacy updates via RSS feed, visit

In order to receive e-mail notices of Advocacy's press releases, monthly newsletter, small business research, statistics, and regulatory news visit

For Release: February 12, 2009
Contact: Kathryn Tobias, (202) 205-6938
SBA Number: 09-05 ADVO

Thursday, February 5, 2009

Inaugural Small Business Development Day!

The City of Fresno and its Organizing Partners are hosting the Inaugural Small Business Development Day. This event will provide business owners with free workshops, training, and technical assistance they need to grow and succeed in today's economy.

Fresno Exhibit Hall - 848 M Street - Fresno, CA 93724
March 5, 2009 8:00 am ~ 5:00 pm

This workshop is FREE to anyone and everyone who wishes to learn or obtain valuable information regarding starting or growing their business.

Click here for the Small Business Development Day registration form

Click here to register for the Small Business Development Day online

Workshop Program
Click here for the Small Business Development Day Workshop Schedule

Sponsorship Package
Sponsorship of this event will demonstrate your organization's support of local economic growth and small businesses.

Click for more on Sponsorship and available levels. Registration for Vender Booth

Small businesses & entrepreneurs can attend workshops and seminars, and receive the information they need to grow. Business to Business Networking booths are available for $350. Non-profit agency exhibit booths are available for $100 with a maximum of two agencies sharing the booth, and providing coverage at all times. Click for more information and sign-up sheet

Event Organizing Committee:
City of Fresno Economic Development Department ~ VSBDC ~SBA ~ HUD ~ Fresno Area Hispanic Chamber of Commerce ~ CalTrans ~ Asian Business Institute and Resource Center ~ SBDC ~ Fresno County Library

Tuesday, February 3, 2009

Sign-up to receive the UC Merced SBDC newsletter!!!

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Monday, February 2, 2009

Check out UC Merced SBDC's Community Pages (Facebook, Blogspot, Twitter, MySpace, and LinkedIn!) We're all over!!!

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