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Scoop: SBA expands its primary business loan program

The U.S. Small Business Administration (SBA) has recently expanded its primary business loan program, marking the first time in over 40 years that such an expansion has taken place. This move brings the total number of nonbank lenders participating in the program up from 14 to 17. Small businesses play a crucial role in the American economy, creating jobs and driving innovation. However, accessing capital can often be a challenge for these businesses, especially during times of economic uncertainty. Recognizing this, the SBA has expanded its loan program in an effort to provide greater access to capital for small businesses. The SBA's primary business loan program, known as the 7(a) loan program, offers financial assistance to small businesses to help them start, grow, and expand. The program provides loans of up to $5 million, which can be used for a variety of purposes, including purchasing equipment, acquiring real estate, and expanding operations. By expanding the program, the SBA aims to increase the number of lenders that can offer these loans to small businesses, providing them with more options and potentially improving their chances of obtaining the financing they need. This expansion is particularly significant as it brings the total number of nonbank lenders participating in the program to 17. Nonbank lenders are financial institutions that are not traditional banks or credit unions. These lenders operate outside of the traditional banking system and often specialize in providing loans to small businesses. By including nonbank lenders in its program, the SBA is tapping into a new source of capital for small businesses, which could be particularly beneficial for those that may not meet the strict lending criteria of traditional banks. In addition to expanding the number of lenders, the SBA has also made other changes to its loan program to further support small businesses. One such change is the increase in allowable loan sizes. Previously, the maximum loan amount under the 7(a) program was $2 million. However, this limit has now been increased to $5 million, providing small businesses with access to larger amounts of capital. Moreover, the SBA has also made changes to its fee structure to make the program more affordable for borrowers. These changes include reducing upfront fees and eliminating certain ongoing fees for loans under $150,000. Overall, the expansion of the SBA's primary business loan program is a positive development for small businesses. The increased number of participating lenders, along with the higher loan limits and more affordable fees, will help small businesses access the capital they need to start and grow their operations. It is worth noting that the SBA's loan program is not a direct lending program. Instead, it guarantees a portion of the loan made by participating lenders. This guarantee reduces the risk for lenders, making it more attractive for them to provide loans to small businesses. The SBA's guarantee can range from 50% to 85% of the loan amount, depending on the specific type of loan. To apply for a loan under the SBA's program, small businesses need to work with a participating lender. These lenders determine the eligibility and terms of the loan, while the SBA provides the guarantee. Small businesses interested in applying for a loan should reach out to the participating lenders in their area to discuss their financing needs and explore their options. In conclusion, the SBA's expansion of its primary business loan program is a significant development that aims to improve access to capital for small businesses. The increased number of participating lenders, along with the higher loan limits and more affordable fees, will benefit small businesses seeking financial assistance. By tapping into nonbank lenders and offering greater financial support, the SBA is taking important steps to help small businesses thrive and contribute to the economy.

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