U.S. Rep. Richard Baker, R-Baton Rouge, La., recently introduced legislation (H.R. 5924) to improve the SBA’s Gulf Opportunity Loan Program (GO Loans) for small businesses in or relocating to the counties and parishes declared major disaster areas.
In response to Hurricanes Katrina and Rita, the GO Loans program offered a maximum loan of $150,000 backed by an 85 percent SBA guarantee. The goal was to process the loan application in one day, using SBA Express lenders offering a maximum interest rate of prime plus 6.5 percent on loans of $50,000 and prime plus 4.5 percent on larger loans.
The pilot program has been somewhat hampered since its inception, however, because of perceived limits in the loan sizes and rates as well as problems of bureaucratic inefficiencies.
Baker’s bill attempts to enhance and streamline the program by:
-Making the program permanent before its expiration in November;
-Allowing SBA approved lenders to process SBA disaster loans;
-Increasing the maximum loan amount to $3 million from $150,000 and allowing up to 25 years to maturity;
-Allowing more flexibility for the banks on the rates they can charge;
-Allowing SBA to establish an online application process and to work with the lenders on streamlining the applications; and
-Allowing qualified lenders to use their own documentation, if already approved by the SBA Administrator.
“After a disaster we want to empower lenders and their customers to provide and access assistance quickly and efficiently,” said Baker. “This bill is important because it gives the SBA the ability to guarantee loans by private banks, at lower rates, to disaster victims, and ensures that capital can get into areas impacted by disaster much faster and help business owners get back on their feet.”
Source: U.S. Rep. Richard Baker’s Office
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