Government-backed credit lines of up to $5 million for small businesses will be available soon from the U.S. Small Business Administration, according to Administrator Isabel Casillas Guzman.
The pilot program, an effort on the part of the SBA to expand its flagship lending programs for small businesses, is aimed to be more compelling to both borrowers and lenders than what’s current available, she said. “An ongoing challenge for small businesses who are trying to go after that contract, perhaps to help us rebuild infrastructure … or a manufacturing facility that’s trying to expand its orders, is being able to have working capital to deliver against that,” Guzman said.
The administration’s current loan program backed more than 57,000 loans, a total value of $27.5 billion, last year—a 7% boost from 2022. The new loans will have maximum interest rates based on the prime rate with the addition of 3% to 6.5%, or a total of around 12% to 15%, as well as an annual fee. The small business owners can either finance specific projects or borrow against assets.
Additionally, loans smaller than $150,000 will have an 85% guaranty, a protection for lenders if the borrower can’t pay debts, while loans over $150,000 will have a 75% guaranty.
