Well since I sent you the email about SBA guarantees and waiver of SBA fees a new development has occurred.
It was expected that only $9 billion of the $14 billion was going to be used up at the end of the year so this continuance was important. It now appears that loan demand went through the roof and there will be no money left.
This is truly incredible. In California the most the SBA has ever loaned is $4 billion in a year. I do not know the exact numbers for California but for the last quarter there have been over $1 billion in loans.
For those out there that say there is no credit problem for small businesses there is a demand problem and small businesses aren’t looking for loans this should dispel that myth. See below.
I have written about the authorization of the Small Business Innovative Research program. This program has been operating on Continuing Resolution for years. A compromise was worked out between the Bios and Venture capital people. This morning the Senate approved the bill that put forth the compromise. Unfortunately in the last hour the House did not pass it before adjourning. It therefore is dead this session. Funding will run out at the end of January.
Hopefully we can get reauthorization and get the program on a basis that small business can depend on in the future. Otherwise we will go through fighting again and again every time a Continuing Resolution runs out.
The committee of SBIR’s that Small Business California has put together has been making calls all day. We were at the forefront of this fight and will continue to be in the future.
Small Business California
2311 Taraval Street
San Francisco, CA 94116
SBA INFORMATION NOTICE
TO: All SBA Employees (Control No.: 5000-1190)
SUBJECT: Extension of authority to approve Small Business Jobs Act Loans
As stated in SBA Information Notice 5000-1173 (effective date September 29, 2010), the Small Business Jobs Act of 2010 (the “Small Business Jobs Act”) (Pub. L. 111-240) extended SBA’s authority and provided additional funds to provide fee relief for new 7(a) and 504 loans and a higher guaranty on eligible 7(a) loans. This authority was scheduled to expire on December 31, 2010.
The purpose of this notice is to announce the further extension of this authority through March 4, 2011, as part of HR 3082, the Continuing Appropriations Act, 2011, and to provide related information.
In SBA Information Notice 5000-1188 (effective date December 9, 2010), SBA announced deadlines for submitting Small Business Jobs Act loan applications of December 15, 2010 (for loans submitted under non-delegated authority) and December 31, 2010 (for loans submitted under delegated authority). These deadlines were set assuming that SBA’s authority to make Small Business Jobs Act loans would expire, as scheduled, on December 31, 2010.
Since that announcement, SBA has seen an unprecedented increase in loan applications and approvals. During the week of December 12, SBA approved almost $1.5 billion in Small Business Jobs Act loans—the highest weekly volume since the agency began tracking weekly loan data, representing more loans approved in a single week than in an average month under the previously implemented Recovery Act loan enhancements.
As a result, we now anticipate that funding appropriated in the Small Business Jobs Act will be exhausted on or before December 31, 2010. SBA does not anticipate, nor has it requested, additional appropriations for the loan enhancements authorized under the Small Business Jobs Act.
Because the funding for Small Business Jobs Act loans will soon be exhausted, SBA is not extending the deadlines for submitting Small Business Jobs Act loan applications.
As is typically the case, however, SBA expects that some approved Small Business Jobs Act loans will later be cancelled by the lender or the borrower for various reasons and the funds will not have been disbursed. The extension of authority provided in the Continuing Appropriations Act, 2011, will allow SBA to utilize funds from cancelled loans to process new Small Business Jobs Act loan applications and loan increases until March 4, 2011, thus ensuring that we are able to put every dollar possible in the hands of small businesses, as the Small Business Jobs Act intended. To do so, SBA will stand up a loan application queue once funds have been exhausted to allow lenders and borrowers to choose whether they would like to wait for possible Small Business Jobs Act loans. While we do not anticipate high volumes of cancelled loans, we want to make every effort to direct any undisbursed funds that result from cancellations to new loans for small businesses. We will issue further guidance after the funds have been exhausted.
Lenders and CDCs should promptly cancel any previously-approved Small Business Jobs Act loans that will not be disbursed and notify SBA as soon as possible to help ensure those funds may be used toward additional Small Business Jobs Act loans and loan increases.
SBA Field Offices will advise 7(a) lenders and CDCs of this Notice. Questions concerning this Notice should be directed to the lender relations specialist in the local SBA field office. The local SBA field office may be found at www.sba.gov/localresources.
Grady B. Hedgespeth
Director, Office of Financial Assistance