The U.S. Small Business Administration (SBA) has temporarily expanded the size requirements for SBA-backed 7(a) loans in order to help insert more liquidity into the marketplace. The SBA estimates that more than 70,000 small businesses across the country will be eligible for new loans between now and the time the program ends on September 30, 2010, including many auto-sector businesses.
The temporary loan size standard will allow businesses to qualify based on net worth and average income (rather than by the number of employees). The net worth for the company and its affiliates cannot be in excess of $8.5 million and average net income after federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years cannot be more than $3 million.
The 7(a) program is the SBA’s most popular loan program. The volume of newly approved 7(a) loans sold on the secondary market has increased dramatically in recent months as a result of two other rule changes in March, a temporary reduction in fees charged to borrowers along with an increase in the maximum federal guarantee, from 85% to 90%.
For more information about the SBA’s 7(a) loan program, visit http://www.sba.gov/services/financialassistance/sbaloantopics/7a. For additional information, contact Stuart Gosswein at firstname.lastname@example.org.
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