Plan looks to aid small businesses

SANDPOINT —  Area banking officials are hoping that an influx of federal stimulus dollars will help rebuild the local economy by loosening the financial stranglehold on small business owners.

Billion dollar bailouts have been the most talked about aspect of the newly-implemented American Recovery and Reinvestment Act, but the package also includes a plan to reinvigorate the nation’s many small businesses.

The Small Business Administration, a federal agency put in place in 1953 to aid and protect the interests of small business concerns, was provided with $730 million in stimulus funds to help small businesses owners get loans or refinance existing loans.

Mountain West Bank assistant vice president and branch manager Judy Baird said the money, along with changes to SBA’s lending practices, will make it easier and less expensive for small businesses to get loans.

“What we’re hoping it will do is help stimulate — in terms of some of our customers or business owners in the community — an awareness that there is money to be lent and that the SBA changes can help them restructure a current business or make it more affordable for them to continue to do business,” Baird said.

Mountain West Bank recently hosted a seminar on the subject, which Baird said was attended by approximately 50 small business owners, Realtors and investors seeking information about what SBA’s new programs can do for them.

Among other things, $375 million of the funds will be used to temporarily reduce or eliminate fees on SBA loans, and another $255 million will be used for a new loan program to help small business owners meet existing debt payments.

The SBA does not actually make loans, but guarantees loans made by banks, and part of the agency’s changes include increasing the amount for guaranteed funds from 85 percent to 90 percent of the loan value. The change is meant to encourage skittish banks fearful of defaults to make more loans.

The policy changes are a positive sign for struggling small businesses, but Baird said those interested in taking advantage of the money need to act quick.

“Once these dollars are gone, they’re gone,” she said. “This isn’t an ongoing program, so once those funds are no longer there, that’s it.”

Compared to the entire $787 billion stimulus package, the SBA’s allocation is small, but Baird said the program is a step in the right direction toward ensuring a solid and successful base of small businesses.

“In some ways it’s a drop in the bucket in the overall picture, but it’s significant in that it’s a step the government is taking to recognize that we need to help the small businesses,” she said.