In a recent article by AOL Small Business, many small business owners will start to see financial relief when it comes to government-backed loans in an economy that's slowly on the upswing.
According to a report in CNN Money, the Small Business Administration's 7(a) lending program reportedly supported 37% more loans in the quarter ending December 31st, processing 12,393 loans for a total of $3.8 billion, a 37% increase from a year ago.
Out of the entire small business lending world, loans granted by the SBA to small businesses only make up a very small portion. The fact that there is an increase is a good sign for the days to come in our country where many companies are still reeling.
Historically, we've been able to measure the enthusiasm of banks to give credit to startups and burgeoning small businesses by the number of SBA loans that are granted. The 7 (a) Loan Program and other initiatives guarantee part of the money that banks lend to qualifying businesses. The banks love this particular point because if a business that has been given loan defaults, the government has to pay it back.
With the Recovery Act being passed last year, the $375 million that was offered gave the opportunity to cut fees for small business owners that were seeking loans as well as increase the amount by as much as 90%. An additional $125 million stimulus package was implemented in late December that has helped approve more loans.
On top of the existing funding in place, the SBA plans to provide more in the future and work harder to improve its stimulus measures. The House of Representatives passed a bill in December that will add another $354 million into the system, going toward extending waived fees and increasing guarantee amounts for loans. The Senate is currently reviewing the bill.
Although the results have been slow, they have been improving from small businesses; a sign that the economy will head towards a full recovery.