Spring seems to have breathed new life into many small businesses as institutions are reluctantly relaxing their stranglehold on credit.
The number of newly approved 7(a) loans (the most popular SBA loan program) sold on the secondary market shot up to 35% in Feb. — the latest month that figures were available. That’s an 11% increase from January’s figures.
These figures come from the Government Accounting Office. And the future numbers are projecting even higher.
Why? President Obama’s speech about using $15 billion of federal funds to free-up the secondary market, as well as two rule changes that occurred in March and temporarily cut fees for small-biz owners and boosted the maximum guarantee put up by the feds on certain small-business loans (from 85% to 90%) are cited as major factors in the thaw.
But there are still major concerns. For example, the Small Business Administration has been dragging its heels when it comes to implementing measures to stimulate lending and loans on the secondary market.
Examples: The SBA missed a March 4th deadline to create a secondary market for 504 loans and failed to honor a March 19th deadline to create regulations for SBA-backed loans on broker-dealers in the secondary market.
Small business experts fear that if these issues aren’t resolved in a timely manner, the secondary market could freeze up again — in an even worse way than before.
