Stimulus Boosts SBA Loans, Cuts Small Firms’ Taxes The economic stimulus package includes several measures aimed at helping small businesses by offering tax breaks, increasing SBA guarantees on surety bonds and thawing the SBA loan market. On the tax side, the law allows money-losing small businesses to carry back their 2008 losses to offset profits from the previous five years, rather than the current two years. It also enables small businesses to expense up to $250,000 for capital expenditures in 2009. The law temporarily reduces or eliminates fees charged to lenders and borrowers in the 7(a) and 504 loan programs. On a case-by-case basis, SBA is permitted to temporarily guarantee up to 90% of the amount of a 7(a) loan, other than loans made through the SBA Express program. Currently, the maximum guarantee levels are 75% for loans over $150,000 and 85% for loans of $150,000 or less. The law will help banks provide relatively small short-term loans to small business borrowers experiencing immediate financial hardship and falling behind on loan payments. The new Business Stabilization Program will temporarily allow SBA to fully guarantee stabilization loans up to $35,000, and fully subsidize a small business borrower’s interest payment on the stabilization loan. A borrower does not have to begin repaying the stabilization loan until 12 months after receiving it, and the loan must be repaid in full within five years. To jump-start the secondary market for SBA loans, the agency will be allowed to make loans to broker-dealers. The broker-dealers could use the loan proceeds to purchase SBA loans from banks. Another provision aimed at the secondary market will allow SBA to guarantee pools of “first lien” loans in the 504 program, making them more attractive to investors. To help construction companies get bonds, the law will temporarily increase SBA’s guarantee limit to $5 million, from the current $2 million. It appropriates an additional $15 million for SBA’s surety bond revolving fund. The Senate Small Business Committee estimates the bonding changes will help small businesses access another $6.5 billion in federal contracts. However, two sweeteners for small firms were left out of the final bill: a House provision that would have allowed SBA to make direct loans to small businesses that had been repeatedly turned down by banks; and a Senate provision to increase the size of the maximum 7(a) loan above the current cap of $2 million.