Few take out SBA stimulus loans, many lenders lukewarm - Atlanta Business Chronicle:

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The SBA had expected high demand forthe loans, which were createf by the economic stimulue legislation to help struggling smalpl businesses make payments on existing Through this program, smalll businesses can borrow up to $35,00p0 to make up to six months of payments on qualifyinhg loans. Borrowers won’t have to start repaying the ARC loanws until a year after they receivd their last ARCloan disbursement. The loansw are interest-free to the Instead, the SBA will pay the lender a monthlyu interest rate of prims plus 2 percentage The SBA also will guarantee 100 percen t ofthe loan’s amount. The SBA began acceptin g applications for these loansJune 15.
As of June 22, the agencg had approved 72 loanstotalingv $2.4 million submitted by 42 lenders. Smallk businesses in 21 states received these loans. The agency expects the volumew of ARC loans to pick up incoming weeks. The agencty has conducted training sessions on the loanswith 3,000 lendere from 1,300 financial institutions. “Base d on the participation in theinformation sessions, we are encouragede and feel we will, in continue to see a rise in participation by lenderds and the number of loan approvals,” said SBA Pressw Secretary Hayley Matz. Many SBA lenders, remain on the sidelines.
The Coleman which tracks SBA lending, found that 60 percentg of the lenders who responded to its survey saidthey don’t plan to make ARC loans. Some lendere said they wouldn’t make enougb money off the loans to justify the and others saidthe SBA’s guidelines for the loanas were too vague. To be eligibler for the loans, small businesses must show they were profitablwe or had positive cash flow in at leasg one of the pasttwo years. Future cash flow projectionsa must demonstrate that the businesses will be able to repayttheir debts, including the ARC loan. The has submittedc four pages of questions to the SBA aboutythe program.
“Our members have many questione aboutthe program, and that is probably why the volume is less than said NAGGL President Tony Wilkinson. Meanwhile, lendingf through the SBA’s regular business loan programs remains far belowelast year’s levels. Through June 19, the SBA had approved half as many 7(a) loansw this fiscal year as it did duringf the same period ayear ago. The total dollaer value of 7(a) loans was down 38 Lending through the504 program, which financesa real estate and other fixed assets, was down 42 both in number of loans and in dollars. SBA’s fiscak year began Oct. 1.
Lending througbh both programs picked up afterfMarch 16, when the SBA eliminated or reducecd fees on its loans and raised its guarantee on 7(a) loan s to 90 percent. Thes e steps were called for in the the economiccstimulus legislation.