Stu Neal: SBA gets stimulus funding

On Feb. 18, the Small Business Administration released information on the effects of the stimulus bill on SBA programs. The bill provides $730 million to the SBA and changes many of its lending and investment programs.

"There's a lot to digest in the legislation," acting SBA Administrator Daryl K. Hairston said. "SBA has established teams to tackle a wide variety of policy decisions, system modifications, regulatory changes, legal requirements and new program launches authorized by the president and Congress."

One of the more significant changes is a provision that allows refinancing of certain SBA-guaranteed loans. Many SBA programs did not allow consolidation of previous guaranteed loans to be included in new loans, so this may be good news for small-business owners.

The package also includes provisions that allow expansion of the leverage capacity for Small Business Investment Companies.

According to the SBA, stimulus funding includes:

A new Business Stabilization Loan program will provide deferred-payment loans of up to $35,000 to small businesses that need the money to make payments on an existing and qualifying loan for up to six months. The loans would be 100 percent guaranteed by the SBA, and repayment would not have to begin until 12 months after the loan is fully disbursed.

The bill also allows changes to the SBA 504 program, which I have always considered one of it best programs but one that few business owners are aware of.

The program provides loans for the purchase of commercial real estate and equipment, and it may include build-outs and modifications to those properties, which must be owner-occupied.

Historically, a bank would provide 50 percent of the funding with no guarantee, and a second loan with an SBA guarantee would round out the package. The new program will allow "first lien" loan guarantees to the banks, and it establishes a secondary market to pools these newly guaranteed loans, hopefully encouraging bank participation.

Small businesses have always been the growth engine that leads the country out of tough times, and I have no doubt this will be the case as we emerge from our current situation.

Any tools that offer small businesses additional capital in a tight market can't help but increase the odds for success and encourage small-business growth and the additional employment that become available as business expansion occurs.

I could not, however, understand the government's priorities with the American Recovery and Reinvestment Act.

Out of $800 billion, more than $45 billion has been allocated for those not working as "Assistance for Unemployed Workers," yet only $730 million -- a fraction of the total package -- was aimed at the hard-working entrepreneurs who are the most likely to put them to work.