The Senate approved Saturday a bill extending the increase in the guaranteed portion of many SBA-guaranteed loans from 75% to 90% and waiving guaranty fees through February.  This provision is included in the Defense Appropriation bill.   An additional proposal to extend these incentives through September is pending in the House-passed Jobs for Main Street Act.

The incentives, originally included in the Recovery Act in February 2009, are generally credited with convincing banks to re-enter the small-business lending market.  After the SBA announced that the funds were running out in November, there was an avalanche of loan approvals by SBA-lenders.  Applications that came in after the cap had been reached were added to a large waiting list.  This extension is expected to allow the SBA to work through that waiting list.

SBA lending has historically been only a small portion of small business lending, but these provisions have allowed it to return to more normal levels more quickly than other forms of lending affected even more seriously by the credit crunch.

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