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How does the 2009 Recovery Act Affect My Small Business?

Guest post by: Mash Bonigala

Article Overview: We all know that the economy has been suffering over the past couple of years. We also know that the government has thrown billions of dollars at the problem. I remember hearing that small businesses were supposed to be a key part of the nation’s economic recovery, but I have not seen any of that money. So I did a little research to see what the Recovery Act could do for my small business. The main, small business provisions of the bill include tax benefits, easier access to capital, and a temporary stop on loan fees for SBA 7(a) and 504 loans.

How does the 2009 Recovery Act Affect My Small Business?

We all know that the economy has been suffering over the past couple of years. We also know that the government has thrown billions of dollars at the problem. I remember hearing that small businesses were supposed to be a key part of the nation’s economic recovery, but I have not seen any of that money. So I did a little research to see what the Recovery Act could do for my small business. The main, small business provisions of the bill include tax benefits, easier access to capital, and a temporary stop on loan fees for SBA 7(a) and 504 loans.

The biggest change the Recovery act makes for Small businesses is in the availability of loans. The SBA is now able to guarantee up to 90% of small business loan products. This makes SBA type loans more attractive to lenders making them more willing to extend credit to these businesses. In addition, the Recovery Act makes it easier to sell 7(a) loans, essentially freeing up that secondary market. Section 504 loans have also been reworked to make it easier to obtain and refinance this loan product. The federal government has also made available $15 billion to stimulate lending. The money focuses on small community banks and credit unions.

In addition to changes in current lending practices, a new loan product called the “ARC” loan take effect. This loan is 100% guaranteed by the SBA and is designed to help business owners pay their current loans. ARC loans can be made for up to $35,000, and payment is deferred for 12 months. The government also hopes to encourage socially and economically disadvantaged Americans to start new, small businesses. The primary initiative to realize this goal is SBA’s micro-lending program. This program makes available small loans of less than $35,000 to new, small businesses. While this program, targets low-income individuals, women, and minorities, other small business owners, can also apply.

The final significant changes made by this bill include an increase in the surety bond limits. Previous to the Recovery Act, surety bonds had a limit of five million dollars that has now been increased to ten million and in some cases up to 15 million. This change makes it easier for small businesses to compete for government contracts. The Recovery Act also includes provisions to encourage SBIC to invest more funds in small businesses.

If you have attempted to start-up or expand a small business during the last few years, you know how hard it has been to obtain credit. The government has now done its part in making credit easier to obtain. The critical question is now whether banks will follow the government’s lead. In total, with the Recovery Act, the government has thrown $787 billion dollars at the economic downturn. Now it is up to all Americans to take the steps necessary for change. For some of us, that might mean hiring one additional employee. For others, it might entail building a new store front or looking into oversee markets to sell our products. No matter what small business you own or hope to own, the Recovery Act has given us both an opportunity and a responsibility to be part of building an economically healthy America.

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Article Tags: billions of dollars, business provisions, economic recovery, economy, loan fees, loans, money, recovery act, sba 7a, small business, small businesses



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