CNN: The bill authorizes the Small Business Administration to temporarily eliminate or reduce fees for participation in its flagship loan-guarantee programs, which insure banks against default by small business borrowers. The stimulus bill also increases to 90% the percentage of qualifying loans that the SBA can guarantee.
For companies in need of quick relief, the bill offers a "small business stabilization financing," which gives them money to pay off existing loans. Under the program, the SBA can issue or back loans of up to $35,000; businesses can then use the money to make up to six months of payments on previous loans. Interest on stabilization loans will be fully subsidized, and the loans won't have any payments due for the first year. Borrowers must repay them within five years.
The SBA has a limited window of time and cash to fund these emergency measures. Congress allocated $630 million to fund loan subsidies and modifications, and authorized them to continue through September 2010. If the cash starts to run out, borrowers will have priority over lenders - and small banks will have priority over larger ones - for receiving fee discounts and waivers. Read more here.