By Mark Anderson
Dolan Media Newswires
Minneapolis — If business owners are ready to spend, they may be eligible for the best financing they’ve ever had available, thanks to the small business assistance bill that President Barack Obama signed into law this week.
The $30 billion package includes a handful of temporary and permanent enhancements for Small Business Administration loan products that will cut the costs for borrowers and make many more businesses eligible.
The key provision in the package raises the size limit on borrowers. Businesses with up to $15 million in tangible assets and $5 million in profits are now eligible for SBA benefits. In the past, the ceilings were based on complex industry formulas that barred many low-margin businesses — especially retail and service businesses — from the program.
“This levels out the playing field and makes many more businesses eligible,” said Paul Flood, regional SBA manager with St. Paul-based Bremer Bank.
In another permanent change, the caps on loan size increase from $2 million to $5 million for the SBA’s trademark 7(a) loan product. Maximum guarantees that the SBA can offer are now $3.75 million, up from $1.5 million.
That increase will help finance many more small business investments, Flood said.
“There are a lot of larger small businesses that have been excluded from the SBA provisions up till now, but they’re the kinds of businesses that are really in need. They’re the ones who employ 60, 70, 80 people, and they’re the kinds of businesses that create jobs that can fuel the recovery.”
Other SBA measures in the package restore several loan sweeteners that were provided by the 2009 federal stimulus bill. Those measures eliminated the 2-3.5 percent fees on SBA loans, and they raised the portion of a loan that the SBA guaranteed from 75 percent to 90 percent.
The package adds one more new, temporary enhancement by raising the cap on SBA Express loans from $350,000 to $1 million. Those loans were designed to be completed much more quickly and with less paperwork.
Money ran out on those temporary measures last fall, and Congress reallocated short-term money, which ran out in May. This package restores those benefits through the end of 2010, or until the money is exhausted.