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SBA Lifts Lid on Small Business Loans

Hot on the heels of freeing up nearly $ 1 billion in loans for nearly 2,000 firms, the Small Business Administration (SBA) announced last week it was also raising the maximize size for several of its loan categories. The increase was made possible by provisions in the Small Business Jobs Act recently signed into law by President Obama.

The changes, effective immediately, are permanent for general small business loans under SBA’s 7(a) guaranteed loan program, fixed asset loans through the 504 Certified Development Company program, Microloans and International Trade, Export Working Capital and Export Express loans. A temporary increase for SBA Express loans will be good for one year.

The limits for 7(a) and 504 loans have permanently been increased from $2 million to $5 million, and, for manufacturers and certain energy-related projects seeking 504 loans, to $5.5 million.  The ceiling for International Trade and Export Working Capital loans has also been lifted from $2 million to $5 million.

Another permanent increase was for microloans , which were increased from $35,000 to $50,000 to help larger entrepreneurs with start-up costs and small business owners in underserved communities. The limit for Export Express loans was raised from $250,000 to $500,000 and the program was made permanent.

The cap on SBA Express loans was temporarily increased from $350,000 to $1 million. These loans offer a streamlined application process with reduced paperwork and approval, often in a matter of days. Unlike traditional 7(a) loans, SBA Express loans carry a 50 percent guarantee and can be used as revolving lines of credit to help restock inventories and support larger revenue sales, which is particularly critical for small business as they emerge out of the recession, the SBA said.

“Across the country, there are small businesses owners who are in a position to take that next step to grow and create jobs, and these larger loan sizes provide another tool to help them do just that,” SBA Administrator Karen Mills said. “Whether they’re in the start-up phase and could use a microloan or are looking to take advantage of lower real estate prices and interest rates to buy a new building to expand, SBA loans can now be an even greater resource to help entrepreneurs and small business owners get the capital they need.”

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on twitter @nedbsmith.

Ned Smith
Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.