Comments on President Obama's proposal to increase lending limits on SBA loans

Considering the billions of dollars being doled out under the American Recovery & Reinvestment Act (ARRA), it didn't appear as though Congress or the Obama administration really viewed the SBA as playing a significant role in the economic recovery. Under the ARRA only $730 million was allocated to the SBA so that it could temporarily waive fees and increase its guarantees to SBA lenders.

President Obama's recently announced support of increasing lending limits on SBA 7(A) and 504 loan program would be a step in the right direction if Congress acts quickly. An increase in the limits of the SBA's 7(A) and 504 loan programs would be tremendously beneficial for those seeking to finance the acquisition or expansion of existing businesses.

Unfortunately, the focus of the Obama administration's proposal of providing lower cost capital to community banks is not likely to result in a significant change in the lending segments where many small businesses need it the most. Community banks traditionally do not provide substantial working capital lines of credit or "floor plan" financing needed by many businesses. In this difficult economy, many businesses are failing as a result of working capital loans being called or floor plans being pulled.

This proposal is a step in the right direction, but much more is needed to assist small businesses throughout the country. For assistance with small business financing or other corporate questions, please contact J. Thomas O'Brien, Jr. at (804) 697-2070 or tobrien@spottsfain.com.


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