Limits Raised on SBA Loans

[Business Attorney]

Acting under the Small Business Jobs Act, the SBA has permanently increased loan size limits (http://familybusinesslawyer.blogspot.com/2010/10/sba-raises-maximum-loan-sizes.html) under a number of its programs:

7(a) and 504 limits are now $5 million
504 loans for manufacturers and certain energy-related projects are now $5.5 million
International Trade and Export Working Capital loans are now $5 million
Microloan limits are now $50,000
Export Express loans are now $500,000


Also, for one year the limits on SBA Express loans have been temporarily raised to $1 million. The SBA Express loans provide a streamlined application process with reduced paperwork and quick approval.

[vangogh]

Good to know. Thanks for the info David. Not that I'm looking for a loan at the moment, but you never know.

Sounds like this is all coming out of the Jobs Act as part of all the recovery spending. Hopefully it will help give the economy another kickstart. Do you know if the extra money also means it's a little easier to get a loan? Getting more money when you can get a loan is great, but I have a hunch most people have the problem of getting any loan in the first place. Is it possible that with more money the SBA would be a little more willing to take a chance on someone they might not have before? I'm guessing not. Just hoping.

[Steve B]

I've never met anyone that got a loan from the SBA. I'm sure it happens, but I've never met or heard of anyone that I personally know that did (and I know several that at least inquired into doing so).

[Business Attorney]

I've never met anyone that got a loan from the SBA. I'm sure it happens, but I've never met or heard of anyone that I personally know that did (and I know several that at least inquired into doing so).

I've had a number of clients that have obtained SBA backed loans. They really DO exist.

I think the reason that many people who look at them don't end up getting them is because they go in with misconceptions about what the loan programs are. While there are a number of different programs with different requirements, the one thing that they all have in common is that loans are LOANS. That means the lender expects to be repaid its loan amount with interest. The interest may be lower or the government may guarantee a portion of the principal, but the lender must believe that the borrower has the capacity to repay the loan with interest.

I personally have met people who believe the SBA programs provide start-up funds, coming to the table themselves with nothing more than an idea and a desire to go into business. What they are expecting is risk capital (equity) not debt.

There also need to be participating lenders. In Chicago there are many SBA lenders. In some areas, there may be few choices.

[2B-The-Best]

Thanks Business Attorney, just a FYI the one year the limits on SBA Express loans have been temporarily went from 350,000 to $1 million.