Reinvest in America's recovery
The recent confirmation by the Obama administration that the economic stimulus funds earmarked for the U.S. Small Business Administration's loan programs have run out is bad news for Illinois' small businesses and their employees. However, the depletion of the funds is also proof that the loan program was, and is, a critically important part of the nation's efforts to recover from this deep recession.
Utilizing the SBA's loan program, small business owners have been able to gain the credit needed to create and retain jobs. According to federal research, the SBA loan programs are responsible for more than 10 percent of the jobs that have been created or retained by the stimulus funding; however, the SBA programs received less than one half of one percent of the stimulus funds.
The SBA data show that loan volume has been steadily increasing since the February inception of the Recovery Act stimulus program. The weekly average of 7(a) loans in the fiscal year prior to the American Recovery and Reinvestment Act was $118 million compared to a weekly average post-stimulus of $224 million. The SBA reports that since the beginning of the stimulus program, the number of loans is up 66 percent while the amount of money lent is up 90 percent.
SBA officials report that the $2.2 billion in loans were made in November 2009, the largest monthly amount of credit extended since August 2007. According to members of the National Association of Government Guarantee Lenders that complete nearly 80 percent of the SBA 7(a) loan applications (and include many of the nation's community banks), that amount would have likely been higher in November had the money not run out before month's end.
Instead now, with the funding depleted, small businesses loan applicants must go on a waiting list. Small-business owners must wait for working capital, wait to purchase needed machinery and equipment or wait to refinance debt and real estate purchases. Small-business owners now must wait to have the credit needed to create and retain jobs.
Congress must act quickly to extend the stimulus funding for SBA lending so the momentum we have seen over the past few months can continue. America's small businesses still need access to affordable credit so they can continue to create the jobs that this nation so desperately needs. Small businesses need choices, and Congress has the ability to keep credit flowing. Small businesses need this continued opportunity - America's recovering economy deserves this support.
It's time to stop talking and time to start doing. It's time for action. Making more credit available to small businesses is the lifeline for Illinois' local economies and the fuel needed to get our economic engine running at full speed.
• Bruce Lammers is CEO of Ridgestone Bank in Schaumburg. Anthony Wilkinson is president and CEO of the National Association of Government Guaranteed Lenders Inc., an advocacy group for the small-business lending community.