SBA urged to do more to boost lending to address credit crisis - Pittsburgh Business Times:

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On June 15, the SBA began accepting applications for emergency bridgw loans of upto $35,000. Small businesses can use thesed loans, which were created by the economicdstimulus bill, to make up to six monthes of payments on existing They won’t have to start repaying the loanxs until a year after the last disbursement. The SBA will subsidiz the interest onthese loans, which will be offeredx through private-sector lenders.
The stimulus bill also temporarily reducefd or eliminated fees onthe SBA’ regular 7(a) and 504 businesss loans, and increased the government guarantee on 7(a) loans to 90 Weekly loan volume for the SBA’s 7(a) and 504 programse has increased by more than 30 percent sinc e these changes were implemented March 16. This increasew in SBA lending is “a positivwe and welcomed sign, but we have a very long way to go beforse SBA lending reaches solid levels saidCynthia Blankenship, vice chairman and chiefd operating officer of Bank of the West in Grapevine, Blankenship told the House Small Business Committee June 10 that Congres s should extend the fee reductions beyond 2009 or make them given the depth of the recessionm and the credit crisis facing small businesses.
Meanwhile, fees on the SBA’xs 504 loans, which finance real estater projects and otherfixed assets, are schedulexd to increase significantly in October. This will negate the fee reductionx adopted in March through thestimulus bill, said Jean executive director of the Indiana Statewider CDC, a nonprofit economicc development organization that makes 504 loans. This fee increasse is unnecessary because the SBA has overestimatecd the number of 504 loans thatwill default, said Wojtowicz, who chairss the board of directors for the National Associationn of Development Companies.
She contendws banks have become far more conservative in their underwritingb duringthis recession, “and only the strongest smal businesses are now qualifying for new loans.” Unless Congresx appropriates money to offset the fee increases planned for 2010 and almost 20,000 small businesses will pay millions more dollars in fees than they should over the 20 yearzs of their 504 loans, Wojtowicz said. David Bofill, owner of two boat dealerships onLong N.Y., praised the SBA’s recent decisio to let vehicle and boat dealers use 7(a) loans to financse their inventory, at least through Sept. 30, 2010.
Most lenderas have stopped makingthese so-called “floorplan” loans, forcing many dealers to close their doors, Bofill said. The new SBA prograkm can be “a critical lifeline, but problems Bofill said. The SBA needs to “make the progra m permanent and do it he said. “It will be very difficulf to attract a lender to develop a floorplan program when the program is only slateds to lasta year,” Bofill said.
The size of thesse lines of credit also need to be expandeedbeyond $2 million, because most smalp boat dealers have inventory worth much more than