Starting 11/23/09 Small Business Owners will have to start paying the SBA guarantee fee again if they want to borrow money under the SBA program. The Government has decided not to replenish the Stimulus funds they set aside on Feb 17, 2009 to pay that fee. The SBA fee is $26,250 for a $1,000,000 loan. Small business owners are struggling with reduced revenue, tighter cash flow, higher potential costs of health care reform, etc. Burdening a small business owner with high SBA closing costs will not help.

With current economic conditions and uncertainty in the financial markets, small business owners are burdened with an inability to obtain financing for their business. Unable to borrow money they must find new ways to support their business cash flow needs. They have reduced inventory on hand, shortened terms for accounts receivables to clients, and resorted to using high interest rate credit cards.

Washington considered many options in the past few weeks relating to the SBA program. The Banking community had hoped the government would pay the guarantee fee for another year. A transition period to pay half the guarantee fee would also have helped. The Government funded $780,000,000 this past year (2009) to pay for the SBA guarantee fees. This is a small amount compared to the large bail outs paid made to AIG and GM alone.

The decision to stop supporting the SBA program “cold turkey” at this time when the economy is fragile and just starting to show mixed signs of a guarded recovery appears to be harsh and possibly foolish on the part of the Washington decision makers