Recent SBA Initiatives Designed to Meet Needs of Small Business Owners

The challenges of today's economic times are not lost on the U.S. Small Business Administration, the federal agency charged with assisting the nation's entrepreneurs with information, services and access to capital. The following initiatives demonstrate SBA's efforts to respond to the needs of prospective and existing small business owners.

Help for rural communities

The agency has recently launched a program to enhance economic development in the nation's rural areas by making it easier for smaller community banks and credit unions to use SBA loan products to finance small businesses.

The Small/Rural Lender Advantage is part of the agency's 7(a) loan program and encourages smaller and/or rural lenders (lenders making 20 or fewer SBA loans a year) to offer SBA loans by streamlining the SBA's loan application and approval processes.

"It's the smaller community banks that really hold many rural areas together by assisting locally owned businesses," says Jay Edwards, SBA senior area manager headquartered at the University Center for Innovation and Entrepreneurship at MU. "This initiative is the agency's response to the need for more relationship support for rural small businesses at the same time it assists lenders in providing badly needed capital to their region's entrepreneurs."

The key features of Small/Rural Lender Advantage include:

• A shorter, simplified application for loans of $350,000 or less
• An expedited SBA loan processing time of three to five days
• Only limited, key financial documentation is required
• An SBA guaranty of 85 percent is available for loans of $150,000 or less; 75 percent if
  the loan is larger
• A simplified loan eligibility questionnaire is provided to help small or occasional SBA
  lenders understand SBA's eligibility criteria
• SBA provides specialized assistance to small/rural lenders on complex eligibility issues

"Small businesses are critically important to rural areas," says Edwards. "They account for two-thirds of all rural jobs and total more than 90 percent of all rural businesses."

The agency reports, however, that the number of banks taking advantage of SBA loan programs has declined in recent years. SBA hopes to enhance its relationship with small, rural banks by streamlining the loan process.

Patriot Express Loan program helps veteran entrepreneurs

About a year ago, the SBA launched the Patriot Express Loan initiative for veterans seeking to use SBA-guaranteed loans to start or expand their own businesses. Since then the agency has guaranteed more than $150 million in loans to nearly 15,000 individuals.

Edwards says the Patriot Express is a streamlined loan product based on the agency's highly successful SBA Express Program, but with enhanced guaranty and interest rate characteristics.

"This product features the fastest turnaround time of any of SBA's loan approvals," Edwards says. "Loans are available up to $500,000 and qualify for SBA's maximum guaranty of up to 85 percent for loans of $150,000 or less and up to 75 percent for loans over $150,000 up to $500,000. For loans above $350,000, lenders are required to take all available collateral."

The Patriot Express loan can be used for most business purposes, including start-up, expansion, equipment purchases, working capital, inventory or business-occupied real-estate purchases. And,
Patriot Express loans feature SBA's lowest interest rates for business loans, generally 2.25 percent to 4.75 percent over prime depending upon the size and maturity of the loan.

Patriot Express is available to military community members including veterans, service-disabled veterans, active-duty service members participating in the military's Transition Assistance Program, Reservists and National Guard members, current spouses of any of the above, and the widowed spouse of a service member or veteran who died during service, or of a service-connected disability.

And on another note…

Edwards says the 2008 Economic Stimulus Package contains some provisions that will greatly reduce the taxes many small businesses will owe when Dec. 31, 2008, closes out the tax year.

In an effort to get the economy revitalized as soon as possible, SBA has established a Web site that helps explain what the package can—and cannot—do at www.sba.gov/stimulus/.

In addition, a factsheet is available at www.sba.gov/idc/groups/public/documents/sba_homepage/sba_eco_stimulus_package.doc

Another link on this Web page is a depreciation calculator that allows users to determine how much depreciation can be taken during calendar year 2008 under the package. In addition, the Web site includes a free nine-minute (plus or minus) online seminar.

There is also a link at www.irs.gov/newsroom/article/0,,id=179227,00.html to an Internal Revenue Service Web page that provides information on the provisions of the 2008 Economic Stimulus Package. Between the IRS and SBA, the government hopes to eliminate any confusion about the provisions of the law.

Unlike the economic stimulus payments that millions of individuals have already received, the tax benefits for businesses are not automatic; businesses must act to take advantage of the new provisions by purchasing qualifying property.

Contact your local SBTDC for more information by visiting www.missouribusiness.net.

Authored by: Virginia Wilson, counselor with the Missouri Small Business and Technology Development Centers in the MU University Center for Innovation and Entrepreneurship.
Date reviewed: 7/8/08

This story was featured in the July 2008 newsletter