New York (CNNMoney.com) – Stimulus money helped revive the government's small business lending program after the recession threw it into a near freeze.
But this quarter, as the bonus funds ran out, the program's growth again began to stall.
The SBA's flagship 7(a) lending program backed 12,123 loans totaling just shy of $3 billion in the three-month period that ended Wednesday. That's a 7% increase from the number of loans made in the same quarter last year, and a 21% jump in the total dollars lent out.
But compared to the first three months of 2010, lending pulled back quite a bit. The number of loans backed by the program fell 27% from the prior quarter, when the SBA processed 16,558 loans totaling $3.7 billion.
Volume through the quarter was noticeably choppy, and dried up in June after money for additional lending incentives ran out.
The SBA's primary lending program doesn't make direct loans; instead, it backs loans made by banks, insuring a portion of each loan against default. As part of the Recovery Act passed in February 2009, Congress set up a funding pool that let the SBA temporarily eliminate fees for its loans and increase the portion of each loan that the government guarantees to as much as 90%.
The SBA has run out of the money Congress allocated for the stimulus provisions four times: in November, February, March, and a month ago at the end of May.
Each previous time, Congress allocated more cash to keep the incentives going, but in May it let them lapse.
The effect was quick and dramatic. In the 10-day period from May 21 to May 31 - when lenders knew the funding was on the verge of running out - the SBA processed 2,042 loans totaling $729,530.
After that, loans carried fees and lower guarantees. In the week of June 4 to June 11, the SBA processed 529 loans, totaling less than $100,000.
Lenders are hoping Congress will bring back the bucks. The SBA is currently running a waiting list, the Recovery Act Queue, for borrowers interested in getting a loan under the enhanced loan conditions should money become available again. The queue currently has 419 borrowers in line, requesting more than $123 million in funding.
"This is a top priority for the agency," SBA spokesman Jonathan Swain said of the agency's push to revive the stimulus incentives. "These programs have been very successful boosting the availability of credit for small businesses."
The House and the Senate have been shuffling various small business proposals back and forth, but have not yet synched up to pass any of them. In the most recent legislation, a small business jobs bill introduced in the Senate on Tuesday, the SBA's Recovery Act benefits would be extended through December of this year.
Barack and Pelosi are raising taxes on ALL business and business owners.
That is what is killing job growth and business growth.
The goverment is trying to break private enterprise.
The goverment wants to nationalize and take over large corporations.
Barack wants to build the HUGO CHAVEZ model and nationalize oil, banks, news, etc...
He is a socialist by all regards and will bring us to a communist level where he can be the sole leader.
The man is AGAINST everything that AMERICA stands for.
He does not believe in freedom.
He does not believe in liberty.
He only believes in socialism....the true benelovent dictator.
Why are we surprised that when stimulas money runs out – we are back to where we started. Is this a new Dumb and Dumber movie.
Does this mean that Obama and Biden will put their summer recovery tour on hold?
You can't have a stimulus when the First Lady's aide's salary caps over six million dollars. The first time in history a President's wife has to have over twenty staff aides for herself. The most before Hillary with three. From there it only goes down. I realize that the OBAMA's are helpless when called upon to do things that requires brains. But this is ridiculous.
SBA? Several Banking Administrators? Some Boring Acronym? Does anyone go to journalism school anymore?