Act Now to Refinance. Very Best of SBA Programs Expiring Soon!

The fee-free, 90 percent guaranteed loan program offered by the Small Business Administration (SBA) will cease Dec. 31, 2009, or when funding runs out.

In February, the SBA set aside $375 million to temporarily suspend loan fees and increased the loan guarantee on certain loans. The SBA’s actions were part of the American Recovery and Reinvestment Act (ARRA). So far, the SBA has used about 55 percent of those funds. Barring another congressional action the program will soon revert back to its pre-ARRA status. This means the guarantee levels the SBA promises banks will drop to 75 to 85 percent (depending on the loan type), down from 90 percent, after the program is over. The decline in guarantee levels will make it incrementally tougher to gain approval. A lower SBA guarantee means banks assume greater risk. In addition, business owners will once again have to pay a 2-3 percent loan guarantee fee to the SBA.

The SBA loan approval process can take as long as 120 days, so business owners wishing to refinance should get moving! Here are some suggestions:

Get Your Financial Statements Ready. You’ll need at least three years of tax returns and up-to-date financial statements (income statements, balance sheets, statements of cash flows and projections).

Consider a Preferred Lender: Go to http://www.sba.gov/localresources/index.html for a list of preferred lenders in your area. Apply for an SBA loan through a non-preferred lender and process can take longer.

Diversify: Apply to at least three banks. Going through the application process at several won’t harm your credit.

Ask for help: An experienced business advisor can help. Tap a volunteer business professional in your area through SCORE (http://www.score.org/index.html). In addition, there’s at least one SBA district officer in each state who can answer your questions.