Small Business Administration (SBA) lending, which was on unsure ground last year, is making a strong rebound. In Q4 of 2009, the SBA processed 12,393 loans (a 37 percent increase over 2008), totaling $3.8 billion (double the amount from Q4 2008). CNN Money reports on the effects this growth might have going into 2010.
“The big takeaway that we have when we look at this is that we were successful in turning around the SBA lending,” SBA spokesman Jonathan Swain said.
A lagged recovery: SBA loans represent a tiny portion of the overall small business lending landscape, but they’re an important barometer of banks’ willingness to extend credit to startups and growing companies. The SBA program guarantees a portion of the money banks lend to qualifying businesses. If the borrower defaults, the government pays the bank back.
Stimulus help: In response to last year’s credit crisis, the government lined up a slew of stimulus measures aimed at increasing lending through the SBA’s programs.
February’s Recovery Act set aside a $375 million funding pool to temporarily eliminate fees for a SBA loans and increase the portion of each loan that the government guarantees, up to 90%.
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