In a Univ. Of North FL post;
“The parts of the federal government’s stimulus program aimed at small-business owners aren’t working as they should, say local owners and small-business experts who are trying to figure out what to do about the problem.
The American Recovery and Reinvestment Act of 2009, also known as the stimulus bill, included several provisions aimed at loosening up lending for small businesses. The law includes money to temporarily eliminate fees on loans backed by the U.S. Small Business Administration, as well as a provision to that allows the SBA to guarantee as much as 90 percent of a small-business loan.
At a meeting Wednesday between area lenders and the local small-business community, banks said the new programs have issues that prevent them from handing out loans. Lawmakers hoped to solve that problem in part by offering enhanced loan guarantees, which were supposed to reduce the risk for financial institutions and encourage renewed lending.
But some banks said they fear the SBA will subsequently deny claims for repayment of loans made to businesses that are already losing money because of the recession. Others lenders said an interest-rate cap on guaranteed loans — based on a prime rate that is currently extremely low — results in margins that are too thin to justify the risk of lending to small businesses and startup companies.”