Loans to Small Businesses Plummet

Loans backed by the Small Business Administration dropped significantly after stimulus incentives dried up.

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After a noticeable increase thanks to stimulus perks, loans backed by the Small Business Administration tumbled in June after funding for the incentives dried up. The total value of SBA loans made dropped almost two-thirds, from $1.9 billion in May to $647 million in June.

The drop in small-business loans comes amid the ongoing financial reform debate in Congress.

The economic stimulus upped the guarantee on the SBA's flagship 7(a) loans 90 percent instead of 75 percent and reduced or waived fees on the 7(a) and 504 loans. These incentives were added to bolster lending practices after the recession began in 2008.

The Senate is currently considering a small-business reform bill, which would extend support for SBA lending by decreasing fees and increasing guarantees. If it passes the Senate vote, which could occur next week, the bill will then move to the House.

Tags: 7a loans, Karen Mills, lending, News, SBA, SBA loans, small-business lending, small-business loans

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