The Basics: Small Business Administration Loans
The Small Business Administration (SBA) is a government agency whose mission is to support small businesses and business owners. While the SBA does not make loans directly to small businesses ; rather, it educates business owners on the loan opportunities available to them, helps them to prepare to apply through a bank or lending institution, and acts as a guarantor on the loans.
Latest news:
NAR Supports Credit Union Lending Bill (June 15, 2011)
SBA Expands Temporary Refinance Program (April 4, 2011)
NAR Urges Members of the House of Representatives to Support H.R. 4: The Small Business Paperwork Mandate Elimination Act of 2011 (March 1) (PDF: 107K)
SBA Announces New Commercial Real Estate Financing Program (Feb. 17)
NAR Urges Committee to Repeal 1099 Reporting Provisions Enacted in 2010 (PDF: 106K) (Feb.15)
Letter Urges Repeal of Landlord Reporting Provision (PDF: 106K) (Feb. 7)
Small Business Jobs and Credit Act of 2010 (H.R. 5297)
On September 27, 2010, President Obama signed into law the Small Business Jobs and Credit Act of 2010 (H.R. 5297), which created additional funding for its existing Section 7(a) and Section 504 loan programs, as well as other provisions.
NAR supported this law that:
- creates a Small Business Lending Fund from which the U.S. Treasury would be authorized to lend up to $30 billion to interested community banks to further expand lending to small businesses;
- enhances Small Business Administration (SBA) programs and provides $12 billion in tax breaks for small businesses.
- expands 1099 reporting related to a trade or business.
For a full explanation of this law and it's implications for REALTORS®:
For more information on 1099 reporting:
- Information Reporting IRS Form 1099 >
- NAR Urges Senate To Repeal the Onerous 1099 Information Reporting Requirements >
Section 7(a)and Section 504 Loans
Borrowers apply for these loans directly with their lending institutions, which can include banks, credit unions, and small business lending companies. The lender, however, must be SBA approved. The lender will evaluate applications based on conventional lending standards and will opt to either: make the loan through conventional financing; make the loan using an SBA guarantee; or decline to make the loan.
The Small Business Jobs and Credit Act of 2010 enhances Small Business Administration (SBA) programs. Specifically, the legislation raises loan limits from $2 million to $5 million for SBA 7(a) loans and from $1.5 million to $5.5 million for SBA 504 loans. Moreover, it allows 504 loans to be used to refinance short-term commercial real estate debt into long-term, fixed rate loans. Provisions in the bill temporarily increase the SBA's 7(a) loan guarantee to 90 percent and eliminate fees for all 7(a) and 504 loans through December 31, 2010.
