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Stimulus money for SBA loans dries up

By Libby Clark
Published: December 2, 2009, 12:00am

Congress will be asked to extend program for small businesses until February

In October, several Vancouver-area lenders warned that Small Business Administration stimulus money could run out in early December, especially if borrowers rushed to file applications out of fear that the program would expire.

Sure enough, the SBA stopped issuing stimulus-backed loans on Nov. 23, after a rush of applications were filed and some 2,900 loans were approved nationwide the previous week.

SBA funding for 7(a) and 504 business loans ended one month earlier than expected.

The American Recovery and Reinvestment Act of 2009 poured $730 million into the SBA in February to help spur small business lending — an amount that the agency originally thought would last until 2010.

The agency waived loan fees for borrowers and raised loan guarantees for banks to 90 percent from 75 percent.

Those special rates are now on hold, pending an SBA request that Congress extend the program until February, said Mike Stamler a spokesman for the SBA in Washington, D.C.

“We did well over a billion dollars in loans the week before,” said Stamler. “It was easily the biggest week of the year in both the number of loans and the dollar amount.”

Any loan applications filed after Nov. 23 will be placed on a waiting list to be funded if the program is renewed or if some of the applications filed before the deadline fall through, according to the SBA. About 280 loans had been added as of Nov. 30 and the SBA will continue to add applications to the list until the funds are entirely spent or new funding is found, Stamler said.

Clark County money

As of October, the SBA had issued 89 loans worth $18.3 million to Clark County businesses since January. Some 64 of those loans worth $13 million were subsidized by recovery act funds.

It’s unclear whether banks will continue the same level of small business lending if the stimulus funding isn’t renewed. The program has spurred lending by some banks that were reluctant to put more loans on their books after the financial crisis hit last year.

The average number of loans issued by the SBA each week has increased 80 percent from the weekly average before the stimulus was funded, according to the SBA.

But several Washington and Oregon lenders have expressed optimism that lending will pick up again as the economy recovers, even if the stimulus funding isn’t extended.

“In 2010, we’re going to see the economy at least stop shrinking and hopefully return to some sustainable growth,” Scott Price, a vice president with Umpqua’s government-guaranteed loan department in Portland, told The Columbian in October. “And I think the program will still be popular and utilized even with the 75 percent guarantee.”

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