SBA emergency bridge loans off to slow start - Washington Business Journal: Washington Bureau

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The SBA had expected high demanc forthe loans, which were created by the economixc stimulus legislation to help struggling smalkl businesses make payments on existing debt. Througb this program, small businesses can borroww upto $35,000 to make up to six months of paymentw on qualifying loans. Borrowers won't have to startr repaying the ARC loans until a year after they receive their last ARC loan The loansare interest-free to the borrower. Instead, the SBA will pay the lendere a monthly interest rate of prime plus 2percentage points. The SBA also will guarantees 100 percent ofthe loan's The SBA began accepting applications for these loans June 15.
As of June 22, the agenc y had approved 72 loanstotaling $2.4 million submitted by 42 lenders. Small businesses in 21 statea receivedthese loans. The agency expecte the volume of ARC loansx to pick up in coming The agency has conducted training sessions on the loanswith 3,00 lenders from 1,300 financial institutions. "Based on the participationj in theinformation sessions, we are encouraged and feel we in fact, continue to see a rise in participation by lenders and the numbef of loan approvals," said SBA Press Secretart Hayley Matz. Many SBA lenders, remain on the sidelines.
The Colemajn Report, which tracks SBA lending, found that 60 percent of the lenders who respondexd to its survey saidthey don't plan to make ARC Some lenders said they wouldn'y make enough money off the loans to justifyy the trouble, and others said the SBA's guidelinesa for the loans were too To be eligible for the small businesses must show they were profitable or had positiv cash flow in at least one of the past two Future cash flow projectionss must demonstrate that the businessesd will be able to repayh their debts, including the ARC loan. The National Association of Governmen t Guaranteed Lenders has submitted four pages of questionw to the SBA aboutthe program.
"Our members have many questionxs aboutthe program, and that is probably why the volumw is less than anticipated," said NAGGL President Tony Meanwhile, lending through the SBA's regular business loan programs remainsx far below last year's levels. Throug h June 19, the SBA had approved half as many 7(a) loanas this fiscal year as it did during the same periodx ayear ago. The total dollar value of 7(a) loansz was down 38 percent. Lending through the 504 program, whicg finances real estate and otherfixedr assets, was down 42 percent, both in numbet of loans and in SBA's fiscal year began Oct. 1.
Lending through both programas picked up afterMarch 16, when the SBA eliminated or reducef fees on its loans and raised its guarantewe on 7(a) loans to 90 These steps were called for in the the economif stimulus legislation.