On September 29th, I had the opportunity to sit down with Scott Roen from American Express OPEN to answer questions about The Small Business Jobs Act of 2010 and opportunities available for small businesses under the Recovery Act and Affordable Care Act.
There were a number of great questions we weren't able to get to during the Open for Questions chat, so we thought we'd address a few more here:
Ira in Florida asked:
Now that many of those banks have stabilized, what incentive do they have to lend to small businesses, as credit has been impossible to get for the past 24-36 months in the small business sector?
Here at the SBA, we know that too many small businesses have still been having trouble getting the loans they need. That’s why we’re working hard to increase businesses’ access to capital. The Recovery Act, which raised our loan guarantees and reduced our fees, helped put nearly $30 billion in the hands of small businesses. 1,300 lenders who hadn’t made an SBA loan since 2007 returned to SBA lending.
The Small Business Jobs Act, signed by the President last month, includes a number of provisions that will help put capital in the hands of small businesses. These include the Small Business Lending Fund, which will provide capital to smaller, community banks so they can increase their own small business lending. We know these small lenders are some of the strongest partners for small businesses in their communities. The Jobs Act also increases the maximum size of SBA’s microloans, and strengthens our loans for working capital, mortgage financing and other needs.
SBA has already begun funding Jobs Act loans with the increased guarantee and raised fees that were so successful under the Recovery Act. When the Jobs Act was signed, there were nearly 2,000 small businesses in our loan queue, waiting for loans with these enhancements. SBA has already cleared out the queue, approving nearly a billion dollars in loans to small businesses.
Neena in Virginia asked:
We would like to know how the US government plans to create an environment that is pro small business. Today, although much is mentioned about the importance of small business, very little financial/tax-based support is provided to the small business owner.
Small businesses are the engine of our economy. We’re counting on small businesses to grow our economy, create jobs, and pull us towards a full recovery. That’s why this Administration has been dedicated to supporting small businesses. In the past two years, the President has cut taxes for small businesses eight times, and the Small Business Jobs Act contains eight more tax breaks. This includes zero taxes on capital gains from key small business investments, an increase in the deduction for start-up expenses, deductions for providing cell phones to employees, accelerated “bonus” depreciation, and more.
Bill in Arizona asked:
Administrator Mills, How long do you expect it to take the SBA to generate and distribute the rules for handling the larger 7(a) and 504 loan limits?
The Small Business Jobs Act permanently increases the maximum loan sizes in our top two programs, 7(a) and 504, from $2 million to $5 million. Increased loan sizes will help many small businesses who need more capital, such as manufacturers, exporters, contractors and franchisers.
SBA has already begun funding these larger loans, and we are looking forward to implementing more pieces of the Jobs Act in the weeks and months ahead.
Shante in New York asked:
As a women owned minority business owner, I find that only 5% of the loans are being granted to my population. I am in need of working capital and want to apply for a 7(a) to expand my company. However, with the current trends, the odds are not in my favor of being granted. Is the SBA looking into the lending institutions and/or their own agency to further probe why such a huge imbalance exist?
SBA is committed to helping women and minority entrepreneurs and small business owners get the capital they need. In fact, women and minorities are 3 to 5 times more likely to receive a loan if it’s guaranteed by the SBA. 18% of our Recovery loans, worth more than $3 billion, went to women-owned businesses, and billions more went to minority-owned businesses.
The Small Business Jobs Act enhances our ability to get working capital in the hands of small businesses by increasing our guarantee on 7(a) loans, reducing our fees, and raising the size limit of many of our loans. We’ve heard time and again from business owners that these provisions will help them secure the capital they need.
In addition, SBA’s resource partners, including 110 Women’s Business Centers, nearly 900 Small Business Development Centers, and 350 chapters of SCORE, can help you write a plan for growth and prepare your loan application. We want women and minority business owners to get the loans they need, but at SBA, we’re also there to help you along the way.