Pushing Pencils, It Seems
In a previous blog entry, I expressed skepticism about the Small Business Administration’s forthcoming emergency credit facility, tentatively named “America’s Recovery Capital (ARC) Loan Program”. The legislation enabling this program, the stimulus bill, requires the SBA to create a new “business stabilization” program to back loans of up to $35,000 to small businesses “experiencing immediate financial hardship”. Now there is another reason to question the value of this program.
A recently released Government Accountability Office report announces that the Small Business Administration will be a few months late installing some new regulations meant to revive SBA lending, which has dramatically declined over the past year. Two changes mandated by Congress, including eliminating loan fees and raising loan guarantees for borrowers, were enacted in the required 15-to-30-day period. But the SBA failed to increase guarantees on secondary market real estate and equipment loans and to issue regulations involving “systemically important” broker-dealers in the secondary market in a timely manner. SBA officials stated that it was too complicated to enact such rules in the short period required by Congress and that they hoped to have these matters resolved by June.