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The word is out that the new stimulus bill (American Recovery and Reinvestment Act of 2009) has a special provision creating a Federal government secondary market for SBA guaranteed loans.

If you are a small business owner, will this loosen up my lender purse strings and allow some money to trickle down from the big cats on Wall Street and into your pockets?

Yes, it is a good start, but hold your contagion because it is not as wildly exciting as you might think. In fact, some have openly criticized the new bill. This is a continuing article (20 in all) on the subject: Help. Is anyone out there loaning to small businesses anymore?

Let us first begin by looking at a program that is already in existence and is being sold on the secondary market. There is a loan program out there and SBA lenders are actually making loans currently: the Community Express Loan Program. This gives unsecured small business loans between $5,000 and $50,000 with very little paperwork, answers typically in two days, interest rates presently at 7.75%, funding and two weeks, and monies wired directly to your business account.

There are still lenders participating in this program, although Congress has failed to make the program permanent and still has a 10% cap on the number of loans. Enter the Obama stimulus bill. Let us look how it affects this program and small business lending as a whole.

Some undiscerning headlines claim $3 billion in the stimulus bill is being pumped into the secondary market and viola, the banks will be making more loans. Not so fast. As this article explains, that money is being pumped into an elite SBA program that will not affect the average small business owner.

Before I give a clear answer, let’s define what we’re talking about. Most of us have heard about SBA loans. With the exception of disaster loans and the Microloan Program (for underserved communities), the Federal government through the U.S. Small Business Administration (SBA) does not actually loan the money.

Instead, it licenses private lenders, like the community bank on your block, to make loans and if there is a default, Federal government guarantees come to the rescue and reimburse for a certain percentage.

So, if you got a $100,000 loan (in this economy? OK, hypothetically) that has a 75% guarantee and there is a default, after going through certain steps, the lender could receive reimbursement for up to $75,000.

And remember there are literally thousands of lenders out there that do SBA loans for the simple reason they feel warm and fuzzy with the guarantee.

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Small businesses at the Shore were approved for more loans at the end of last year, the U.S. Small Business Administration said Wednesday, in a sign that the tight credit standards may be thawing.

Forty-nine Monmouth and Ocean county businesses received SBA-backed loans worth $18.1 million during the last three months of the year, up from 35 businesses that received $16.7 million the same quarter the previous year, the SBA reported.

“We do see trends that indicate the worst is behind us, and we’re hopeful this trend we’re establishing continues on,” said James A. Kocsi, director of the SBA’s New Jersey district.

Small-business lending plummeted the past two years as banks, stung by bad loans, tightened their standards. It made it tougher for small businesses to buy equipment, pay workers and fuel the economy.

To jump start lending, the federal government as part of the economic recovery act provided $730 million to the SBA at least partly to eliminate and reduce fees and guarantee up to 90 percent of a loan. (The SBA previously guaranteed 75 percent to 85 percent of a loan.)

The incentives will remain until the end of February. But Congress may extend them through the end of the year.

Small-business owners say the credit market remains tight. Seaside Materials Inc., a Long Branch company that sells masonry building supplies, recently was forced to search for another lender after its long-time bank called in its line of credit, said Anthony Damiano, the company’s chief executive officer.

The company saw sales fall 60 percent during the recession. And even though it cut expenses just as rapidly and never defaulted on a loan, it couldn’t convince other banks to work with it, Damiano said.

The company, however, caught a break when Basking Ridge-based Affinity Federal Credit Union agreed to lend it about $580,000 — most of which will be guaranteed by the SBA.

“I found (Affinity) to be very communicable, especially in these times, because a lot of banks aren’t doing anything right now in terms of looking out for small businesses,” Damiano said.

TD Bank remained the biggest SBA lender, both at the Shore and in New Jersey. But three other banks that aren’t household names — BNB Bank, Indus American Bank and Innovative Bank — were among the biggest SBA lenders in New Jersey.

Kevin McCloskey, vice president of lending at Affinity, said the credit union became an SBA-approved lender just last year, hoping the banking industry’s credit crunch would allow it to make more business loans — and add customers.

All but one of its new customers “are being asked to leave the bank they’re at now,” McCloskey said.

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