Q&A: The New SBA Loan Programs

Tanner Eckler is assistant vice president for Bank of Oklahoma. He recently answered questions about new programs and guidelines implemented by the Small Business Administration (SBA) as part of the America's Recovery Capital (ARC) loan program approved by Congress as part of the trillion-dollar stimulus plan.

Q: Is your SBA lending more active now with the new programs initiated by the federal government?

A: Yes, it really made it attractive to people. The fee waiver and the increase in the guarantee level have created more demand for SBA loans.

Q: Will Bank of Oklahoma participate in the 100 percent guarantee program approved by Congress?

A: Yes we will, at least for existing customers with a viable business. We won't be taking on new customers with this loan program right now because our take is it's designed to help our existing customers first. We believe the program is set up to help our current customers retain jobs and to make loan payments for that six- to nine-month period.

Q: Are you seeing your loan demand increase?

A: Actually, I think we're seeing an increase in awareness more than anything. The program and all of its benefits have been in the news more and we're starting to get some questions answered. I think we have all the information as it pertains to the borrower, but there remain unanswered questions with respect to how the new programs will impact the lender.

Q: Are you still worried about loan quality even though the government guarantees up to 100 percent of the loan?

A: Actually, we don't have all the information about the program yet. We know it's a 100 percent guarantee, that the interest will be paid by the SBA, and the loan amount is $35,000. What we don't know is how and when the loans will be subsidized. Will it be 1, 2, 3 percent interest that is paid to the lender? It's certainly an attractive program, but we still care about loan quality. The SBA developed the program to bridge some gaps and to help eliminate credit risks that we might not be able to take on otherwise. But yes, the underlying credit qualities are still needed. We wouldn't want to put loans on the books that cost the bank money, which can occur even in a 100 percent guarantee situation because it costs a lot of money for a bank to service a troubled account.