SmallBizResource Blog -- Economy

SBA To Lenders: Give Small Businesses A Break

Posted by Gayle Kesten Monday, Oct 20, 2008, 01:30 PM ET

The Small Business Association today reminded its participating lenders that they have the authority to grant three-month extensions for loan payments from their small-business borrowers.

"We recognize that small business owners are faced with challenging decisions right now. By providing three-month deferments to qualifying borrowers who are struggling, our lending partners can help small business owners free up the capital they need to maintain their businesses," said Acting Administrator Sandy K. Baruah, in an e-mail statement.

The SBA's note of encouragement is aimed at 7(a) lenders, which include most U.S. banks, and 504 Certified Development companies, which are nonprofit corporations established to provide financing to small businesses in specific geographic areas.

"Should a small-business borrower require more than 90 days, borrowers can work directly with their lenders who in turn will work closely with the SBA to identify the best solution," the SBA says.

According to the most recent report on institutional lending to small firms (PDF) from the SBA's Office of Advocacy, small-business loans outstanding (loans for less than $1 million) were valued at $684.6 billion for 24.5 million loans from 8,633 reporting depository institutions in the United States and territories in June 2007 (vs. 21.3 million loans valued at $634 billion in 2006). The number of business loans for less than $100,000 grew 13.7% from 2006 to 2007, while business loans for $100,000 to $1 million dropped from 42% in 2005 to 32.3% in 2007.

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