Stimulus funds working for small businesses

Last October, small businesses were hit by a sharply worsening economy that resulted in frozen credit lines and diminished access to capital. This included a major drop in loans backed by guarantees through the U.S. Small Business Administration. 

In February, President Barack Obama took steps to address this crisis through the American Recovery and Reinvestment Act. Within weeks, the SBA activated more than half of the $730 million it received in the Recovery Act to enhance the agency’s two flagship lending programs and get capital flowing again. 

First, the SBA eliminated the loan origination fees for borrowers. This allowed small-business owners to keep thousands of dollars in working capital that would usually have been spent on acquiring the loan. 

To complement this, lenders benefited from some fee eliminations as well as an increased government guarantee of up to 90 percent in the SBA’s largest loan program. 

Now, a little more than six months later, the SBA’s average weekly loan volume has jumped more than 55 percent when compared with the two months preceding the stimulus. In all, the SBA has supported nearly $9.5 billion in lending, with August volume-$1.4 billion-topping that of the same month last year. That has meant $835,000 in fee savings through Aug. 31 for 456 small businesses in Buffalo and Rochester. 

Just as importantly, these actions have brought more than 1,000 banks and credit unions back to SBA lending. This reinvigorated network has created more points of access to capital for entrepreneurs and small-business owners nationwide. 

As a result, small businesses across the country are in a position to do what they do best: drive economic growth and, in turn, lead us out of recession and into recovery. 

For example, U.S. Navy veteran Michael Green saved more than $4,700 in fees when he secured three SBA Patriot Express loans for $184,700 to start his own business, the Hott Spot, in Alfred. The working capital has allowed Green to convert a residence into a business. 

The administration also has reaffirmed its commitment to government contracting opportunities for small businesses. A few weeks ago, the president asked the SBA and the Department of Commerce to lead an effort of the entire federal government to ensure that small businesses have the opportunity to compete for contracting dollars, including those in the Recovery Act. 

This is a win-win. Through contracting, small businesses are able to offer innovative products and services while creating and sustaining jobs. Federal agencies benefit from the nimble and responsive nature of small businesses, often working directly with the CEO. 

Overall, each SBA loan and government contract represents another business that is surviving, finding ways to grow and laying the foundation for U.S. competitiveness in a global market. 

The bottom line is that taxpayers received a powerful bang for their buck with the small-business provisions in the Recovery Act. Money is going to the place where it is needed most and has the greatest potential to drive recovery-the hands of America’s entrepreneurs and small-business owners. 

Karen Mills is the administrator of the U.S. Small Business Administration.