Federal Loan Money to be Available to Small Businesses

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Nationally, about 1,400 businesses waited all summer for the loans. Thousands more loans are expected to be funded by the end of the year. The loans, which were authorized along with tax breaks and other incentives, will not solve all of the problems faced by small businesses in a rough economy, but experts say they're a key step.

Elizabeth Echols, the SBA's new regional administrator for the western U.S., said increasing the flow of loans is key to addressing the single most important concern cited by business owners she has met—the incredibly difficult time they have had finding capital to buy equipment, hire new people or expand.

The SBA is a federal agency that provides a number of services to small businesses, including backing for loans, information on how to start a business and advice on keeping a struggling enterprise afloat. Some of the incentives passed by Congress last month—including increasing loan guarantees to 90% of what a borrower owes and waiving many expensive fees charged to borrowers on SBA loans—had already been part of federal economic stimulus programs.

But the money for those programs ran out in late May. Businesses that were approved for the loans had to wait in limbo until last week, when President Obama signed the legislation that started the funding up again. The law also set up a $30-billion fund to encourage community banks to lend more to small businesses.