10.8.10: SBA to Accept Applications for Loans in Excess of $2 Million

According to an SBA spokesperson, the SBA “will be ready to accept applications for loans in excess of $2 million starting the week of October 18,” despite a recent report by Randy Griffin, President of CSRA Business Lending, that suggested the increase in SBA loan amounts to $5 million will take 60-120 days.

This good news came on the heels of this October 8th press release from the SBA:

“On the heels of completing final approvals of loans to nearly 2,000 firms that has been in its loan queue waiting for final approval of the Small Business Jobs Act, the U.S. Small Business Administration has finished implementation of another major element of the bill: increasing maximum sizes in several of its loan programs.

“The changes — effective today — 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 is good for one year.”

SBA’s own trends show increasing demand for larger loans. The percentage of lending volume for guaranteed loans greater than $1.5 million has grown from 13% of total dollars approved in fiscal 2005 to 21% in fiscal 2010, with many loans actually at the $2-million maximum. In the 504 program, the percentage of loan volume committed to loans greater than $1.5 million also has grown, from 15% of total dollars approved in fiscal 2005 to 25% in fiscal 2010.

The SBA has already put in place the alternate size standard that expands eligibility for SBA-backed loans that was included in the Jobs Act, increasing the alternate size standard to include those small businesses with less than $15 million in net worth and $5 million in average net income.

“We have two borrowers ready to be first in line,” commented Michael D. Sneden, Executive Vice President of ValueXpress. “The first is a $5-million loan that could not meet the tangible equity test under the B&I Loan Guarantee program, and the second is a borrower that needs a second SBA loan that brings his SBA exposure above $2 million.”

This entry was posted in Michael D. Sneden, The Banker's Mortgage Conduit, Valuexpress. Bookmark the permalink.

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