SCOREing small-business success:

“The expectation was that the higher guaranty percentage would encourage lenders to make more loans since SBA would be taking on a higher share of the risk,” Terri Denison told me. She is Georgia’s district director for the U. S. Small Business Administration and closely monitors how the agency’s programs affect small-business activity statewide. “The Recovery Act authorized SBA to raise the guaranty percentage to 90 percent on most 7(a) loans,” she says.

Most SBA-guaranteed loans, ranging from $5,000 to $2 million, are made under the 7(a) umbrella. Banks, and approved non-bank lenders underwrite and fund the loans using SBA’s guidelines. The lenders generally have more stringent qualifying benchmarks than SBA — especially during this recession. By increasing the guaranty to 90 percent from 75 percent, SBA’s plan is to induce lenders to make more loans.

Karen Mills says that the recovery act is beginning to work and lenders are loosening their purse strings. She is a former venture capitalist and has recently been confirmed to head-up the SBA as its administrator. In a May 13 Senate hearing, she told the lawmakers that more than 10,000 recovery act loans have been approved representing about $3 billion going to support small businesses nationwide. You can see a video clip of her testimony online at sbc.senate.gov/hearings/20090513.cfm.

In addition to increasing the percentage of its loan guaranty, SBA has eliminated most fees that borrowers would ordinarily pay. As a result, Dennison says that borrowers are saving money. “Here in Georgia, our first 90 percent 7(a) loan, a restaurant, saved over $12,000” She adds that since the fees were eliminated and guarantees increased on March 16, 7(a) loans approved nationally, are up by a weekly average of 33 percent.

While many of the larger national and regional banks are still waiting on the sidelines, smaller community banks are easing back into small-business lending. And unlike the cookie-cutter approach taken by the larger lenders, small banks tend to underwrite each deal on its own merits.

You can contact SBA’s Atlanta office at 404-331-0100 for a list of its “Certified and Preferred” lenders. Or get the list by downloading the Georgia Start-up Guide at sbaguides.com. The guide also has a list of the agency’s resource partners and the contacts you need to successfully launch your business.

To get small amounts of working capital quickly, check out SBA’s pilot program called “Community Express.” You can borrow up to $25,000 with less red tape. The amount can be increased if you are in a historically underutilized business zone called “HUBZone.”

“Community Express continues to operate as a pilot,” Dennison says. “The SBA will evaluate and make a decision regarding the program near the expiration date for the pilot, currently December 31.” To learn more about Community Express, go to tinyurl.com/2etzls.

But the three lenders that make these loans throughout Georgia, set their own loan amount limitations, interest rates and credit criteria. You can read about the Community Express lending requirements of Borrego Springs Bank, Innovative Bank and Superior Financial Group on their individual Websites; b-s-b.net, innovativebank.com and superiorfg.com. Alternatively, call SBA’s resource partners for free technical assistance before making an application. They are SCORE, Small Business Development Centers and Women’s Business Centers. The Georgia Start-up Guide, mentioned above, provides their locations and contact information.

With SBA lenders coming back into the market and fees being temporarily eliminated, now is the time to dust off your business plan and speak with your banker.