Sen. Evan Bayh, D-Ind., a member of the Senate Small Business Committee, Thursday (May 14) praised the Small Business Administration (SBA) for expanding the agency’s largest lending program, a decision that will expand access to capital for more than 70,000 additional American small businesses — including many RV and automobile dealerships across the country.
The SBA last week announced an expansion of its 7(a) loan program, effective next week through Sept. 30, 2010, according to a press release. The temporary 7(a) loan size standard will allow businesses to qualify based on net and average income. Under the new rules, a small business qualifies for SBA loan assistance if:
- The company and its affiliates have a net worth not exceeding $8.5 million and
- The company and its affiliates’ net income over the preceding two completed fiscal years does not exceed $3 million after federal income taxes (excluding any carry-over losses)
It is estimated that 50% of RV manufacturers and 75% of RV dealers will now qualify for loans under the SBA’s expanded criteria.
“To turn around our economy and help middle class Hoosiers make ends meet, we have to free up capital for small businesses, which are the primary engine of Indiana’s economic growth,” Bayh said. “This is a significant expansion of the largest federal loan program to help small businesses meet payroll and other operating costs. This move by the SBA will provide a lifeline to Indiana’s auto dealers, parts suppliers, and RV manufacturers and help thousands of middle class families who rely on these industries to make a living.”
“We’re encouraged that the SBA is expanding the definition of businesses that qualify for SBA loans to support investments in working capital, machinery and equipment,” said Richard Coon, president of the Recreation Vehicle Industry Association (RVIA). According to Coon, the direct consequence of the current credit squeeze for worthy companies has been lost jobs with RV manufacturers, suppliers and dealers.
“The new loan criteria couldn’t come at a more important time,” Coon added. “When coupled with an emergency rule being considered to permit 7(a) guarantees for dealer floor-plan inventory purchases, these new SBA changes will benefit a large segment of RV manufacturers, dealers and suppliers.”
Bayh continues to urge the SBA to expand the 7(a) loan program to include purchases of floorplan inventory, a change that would provide much-needed working capital for RV dealers and result in the retention of thousands of jobs nationally, including many in Indiana.
For more information about SBA’s revisions to its small business size standards, visit http://www.sba.gov/size/indexwhatsnew.html and click on “Small Business Size Standards.”