In an address on Wednesday, President Obama expressed support for increased lending to small businesses and he pledged to support legislation increasing the maximum size of some small business loans.
SBA administrator Karen Mills issued a statement regarding President Obama's pledge to raise Recovery loan limits:
Increasing maximum loan sizes will allow the SBA to ensure that more small business owners and entrepreneurs can get access to the credit they need to expand their operations and create jobs.
Specifically, President Obama called for:
- Increasing the size of SBA's 7(a) loan from $2 million to $5 million.
- Increasing the size of SBA's 504 loan from $2 million to $5 million for standard borrowers (supporting a total project of $12.5 million) and from $4 million to $5.5 million for manufacturers (supporting a total project of $13.75 million).
- Increasing the size of SBA's Microloan from $35,000 to $50,000.
The 7(a) loan program, called the SBA's "flagship" program, is the basic loan program for both new and existing businesses, providing guarantees to make lenders more willing to accept small business loans.
The 504 loan program provides manufacturers with loans for major fixed assets, including land and buildings.
Under the microloan program, the SBA works with non-profit organizations who provide assistance and small loans (under $35,000) for businesses in targeted and disadvantaged areas.
The President also plans to convene a Treasury-SBA Small Business Lending Conference to work with regulators, lenders and Congress to ensure credit is available to small businesses.
This is good news for the prospects for the ability of small businesses to obtain loans, but it doesn't mean you can just walk into a bank and get a loan. You must prepare a loan proposal that will make the bank sit up and take notice, and you must be ready to answer all questions a lender might ask.
For more information read about How to Prepare a Business Loan Proposal.