Small-Biz Provisions Extended Through May

April 20, 2010

On April 15, President Barack Obama signed legislation extending the small-business provisions of the American Recovery and Reinvestment Act (ARRA) through May 2010. The legislation provided $80 million for this extension. The U.S. Small Business Administration (SBA) estimates that this funding will support about $2.8 billion in small-business lending.

This is the latest in a series of short-term reauthorizations for these highly-effective stimulus provisions. Most recently, the provisions were extended through April and $40 million of funding already appropriated to the SBA was allocated for this purpose.

NSBA repeatedly has called for an extension of the stimulus provisions providing a 90 percent guarantee on SBA 7(a) loans and the eliminating the borrower fees on both 7(a) and 504 loans through all of 2010.

While not a panacea to the small-business credit crunch, the provisions, originally enacted in Feb. 2009, are working. The SBA recently announced that it processed 16,558 7(a) loans in the second fiscal quarter of 2010, which is more than double the 8,205 loans it processed in the same quarter of 2009. In total, $3.7 billion in lending was extended to small-business owners in the quarter, more than twice as much as the $1.6 billion processed a year earlier.

Despite this well-documented success, Congress already has allowed the provisions to expire on three occasions.

With clear evidence that they are paying dividends for America’s entrepreneurs, NSBA continues to urge Congress to authorize and sufficiently fund these critical small-business lending provisions in any forthcoming “small-business jobs bill.”

In particular, NSBA urges the Senate to adopt the legislation introduced by Sens. Mary Landrieu (D-La.) and Olympia Snowe (R-Maine), the chair and ranking member of the Senate Committee on Small Business and Entrepreneurship.

The Small Business Job Creation and Access to Capital Act (S. 2869) would extend the small-business stimulus provisions through 2010. It also would increase the loan limit on 7(a) loans from $2 million to $5 million, on 504 loans from $1.5 million to $5.5 million, and microloans from $35,000 to $50,000. The Congressional Budget Office scored the SBA 7(a) and 504 provisions in S. 2869 at zero cost.

An identical bill—the Small Business Job Creation and Access to Capital Act (H.R. 4302)—has been introduced in the House by Rep. Nita Lowey (D-N.Y.).