It’s been a little more than 100 days since the President signed the American Recovery and Reinvestment Act (Recovery Act). In that time the U.S. Small Business Administration (SBA) has implemented new programs to get credit flowing again and has several more on the way that will help small businesses weather this economic storm, and ultimately continue to grow and create jobs.
First and foremost, we enhanced our top two loan programs -- 7(a) and 504 -- which have so far resulted in $4.3 billion in new loans for small businesses. The SBA temporarily eliminated fees for borrowers on its 7(a) loans and for both borrowers and lenders on its 504 loans. The SBA also temporarily raised the guarantee on most of its 7(a) loans to as much as 90 percent, up from 75-85 percent. In this short time, there has been a 30 percent increase in average weekly loan dollar volume compared to the weekly average before the passage of the Recovery Act.
Right here in San Diego County, El Cajon-based K.C. Equipment, Inc. received a $143,800 504 loan through the Recovery Act, to purchase a new 1500 SF building. "The fact that the fees to obtain an SBA loan are waived, for now, as part of the Recovery Act was a big incentive for us to buy this building," says owner Kevin Casey.
Lenders have responded positively to these program changes. From the signing of the Recovery Act on Feb. 17 to May 29, the SBA worked with 484 lenders that had not made an SBA loan since October 2008. Moreover, of those, 219 had not made an SBA loan since at least 2007. This recovery capital is flowing to a broad base of small businesses: 25 percent to rural; 21 percent to minority-owned; 19 percent to women owned; and 9 percent to veteran owned.
This week, SBA launched the America’s Recovery Capital -- ARC -- loan program. The ARC loans will provide a "bridge" for many small businesses to the better economic times ahead. This program provides loans of up to $35,000 to viable, but struggling small businesses to help them make debt payments. ARC loans are interest free to the borrower, deferred repayment loans, which are 100 percent guaranteed by the SBA. The SBA makes the interest payments to the bank.
With the launch of ARC loans, SBA has now put in place programs implementing 88 percent of the $730 million provided to the agency by the Recovery Act.
In addition to the Recovery Act, we have expanded eligibility of our 7(a) program with an alternate size standard, which makes more than 70,000 small businesses newly eligible for SBA support. Also, we are rolling out a pilot program for Dealer Floor Plan financing on July 1. And, in the coming weeks, we will announce other Recovery Act programs, including an expansion of our microloan program, a loan that uses the 504 loan program to refinance debt, and a guarantee program to stimulate sales of 504 first mortgage pools in the secondary market.
America’s small businesses are the key to our nations’ economic recovery. The SBA is using every tool in our toolbox -- and creating new ones when necessary -- to help small businesses lead us out of these tough economic times.
SBA Success Story
SBA HUBZone (Historically Underutilized Business Zone) certified Kevin Casey, President of K.C. Equipment, Inc. is an Operating Engineer and a member of the International Union of Operating Engineers Local 12 since 1978.
He is certified by the National Playground Safety Institute (NPSI) as a Playground Safety Inspector Playground Inspector, has extensive experience in many facets of both building and engineering construction dating back to 1973.
KC possesses a number of industry-specific certifications and permits, including Excavation, Trenching, and Shoring Competent Person, to name a few. KC started his business with the purchase of a BearCat chip spreader, only one of eight machines in the state of California, to perform a specialized type of pavement maintenance called chip sealing. This technique is very popular in the western U.S. where there is a large demand for it, especially by the USDA Forest Service, Caltrans and the California Department of Water Resources.
After performing several successful chip seals for these agencies KC decided to branch out into other areas of engineering construction and incorporated K.C. Equipment in 1999.
From the beginning he wanted to self-perform as much work as possible so his fleet of equipment and the number of employees has grown every year, now at 10 full-time employees and up to 40 when multiple projects are going on simultaneously.
K.C. Equipment, Inc. obtained HUBZone certification in May 2005. This certification gives Federal contracting preferences to small businesses in an effort to create jobs and stimulate economic development in urban and rural communities.
"HUBZone set-asides or contracts that give a price preference to HUBZone firms level the playing field and empower us to compete with larger companies, many of whom subcontract out large portions of the work and act more as construction managers than contractors," says Kevin Casey.
Additionally, K.C. Equipment, Inc. recently expanded to a new single story stand-alone building located at 413 S. Magnolia Ave., El Cajon CA 92020, with approximately 1500 SF. They utilized an SBA guaranteed loan of $143,800 to purchase the building.
"The fact that the fees to obtain an SBA loan are waived, for now, as part of the Recovery Act was a big incentive for us to buy this building," says Kevin.
With its long history of providing quality customer service, developing solid relationships with many subcontractors and having built a strong resume of successful projects completed on time and at or under cost, K.C. Equipment Inc. looks forward to a long and prosperous future.
For more information about the HUBZone program visit https://eweb1.sba.gov/hubzone/internet/.