At Shaheen's Urging, SBA Makes Credit Available to More Small Businesses by Expanding Loan Size Standards

Press Release

AT SHAHEEN'S URGING, SBA MAKES CREDIT AVAILABLE TO MORE SMALL BUSINESSES BY EXPANDING LOAN SIZE STANDARDS

"Shaheen led bipartisan group of 32 Senate colleagues in urging Obama and the SBA to increase small business access to loans by expanding 7(a) loan eligibility"

For two months, U.S. Senator Jeanne Shaheen has led an effort urging the U.S. Small Business Administration (SBA) and the Obama Administration to make credit available to more small businesses. As a direct result of her efforts, today the SBA announced a temporary change to the size standard of the 7(a) loan program. The change will open 7(a) loans to more auto dealers and other small businesses in New Hampshire and across the nation, giving them greater access to much-needed capital.

"Ensuring that more New Hampshire auto dealers and small businesses can access credit so they can make payroll, grow their business, and stimulate our local economy is key to our nation's economic recovery," said Shaheen. "I've met with small business owners across the state who have excellent credit histories but can't access much-needed credit because of the economic crisis. I'm pleased the SBA has followed our recommendation to expand their loan program and open this loan program to more small businesses. I look forward to working with the Obama Administration, the SBA and my colleagues in the Senate to make sure we put small businesses first in our economic recovery efforts."

In a meeting at the White House in March, Shaheen urged President Obama to expedite implementing provisions authorized by the American Recovery and Reinvestment Act to make credit more available and less expensive to small businesses, such as a reduction in loan fees. During the April 1 confirmation hearing for SBA Administrator Karen Mills, Shaheen again raised the issue and requested that the SBA move quickly to increase access to credit. And on April 7, Shaheen led a bipartisan group of 32 Senators in sending a letter to President Obama urging him to make changes to SBA regulations that would make credit more accessible for more auto dealers and other small businesses.

Today's announcement that the SBA will expand the size standard of the 7(a) loan program was among the group's recommendations to ease the credit crisis squeezing small businesses. Shaheen is continuing to urge the SBA to make the other changes she and her colleagues recommended in the letter that would make auto dealer floor plan financing eligible for the SBA program as well.

According to the SBA, the expansion of the 7(a) loan program will go into effect early next week, making an additional 70,000 small businesses or more eligible to apply for an SBA 7(a) loan. The new temporary 7(a) loan size standard will parallel the standard for the agency's 504 Certified Development Company loan and will allow businesses to qualify based on net worth and average income. For a small business to qualify under the new size standard, the company's net worth cannot exceed $8.5 million, and its average net income after federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years cannot exceed $3 million. The temporary expansion of 7(a) loans also means that more small businesses can benefit from the American Recovery and Reinvestment Act, which authorized an increase on SBA guarantees for 7(a) loans to 90 percent and reduced fees for borrowers.

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