The Small Business Administration has announced it approved 11,580 loans in the second quarter of 2009, representing a 30% reduction from the 16,490 loans it backed in the same period last year. Value of the loans guaranteed in the April through June period of 2009 was $2.5 billion, compared to the $3.5 billion figure for the quarter ended June 30, 2008.
Used for expansion and to help entrepreneurs
buy small businesses, the loans originate from banks and other business lenders, and are facilitated under the SBA’s (7) a program by which it acts as guarantor of up to 90% of the loan amount.
Although this is a disappointing sign, and a demonstration that lending activity is still slower than it was last year, the government agency offered encouraging news, pointing out that loans have increased since February of this year. The gains are a consequence of the Federal Stimulus Package, part of the government’s Recovery Act, and the aggressive moves taken by the SBA in suspending loan fees and increasing the portion of a loan it will guarantee. One expected impact was to spur activity in the market in which companies and individuals buy and
sell small and mid-market businesses.
Also reported is that the secondary market, where a number of lenders sell their loans to other investors to raise capital, is increasing its impact--after months of credit freeze-- with more loans getting purchased in the last few months than was the case at the end of 2008 and early 2009.
Many California-based business lenders also report increased activity, with higher prices offered in the secondary market and funds starting to become more available to business owners and buyers.
See all contributions from Peter Siegel
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