Small Business Finance News
Rhode Island Works With SBA To Boost Lending
Written by Jenna Weiner
Published: 3/30/2011
Rhode Island to commit to guaranteeing an additional 15 percent of SBA loans to bring their total guarantee to 90 percent.
In small business financial news, the U.S. Small Business Administration has been an all-star, making weekly, if not daily, appearances to announce new funding and aid programs for the sector.
Most recently, Karen G. Mills, administrator of the SBA, joined Rhode Island Governor Lincoln Chafee to propose a lending initiative that would specify $5 million of the state's $50 million Job Creation Guaranty Program to create a state guarantee of 15 percent on SBA 7(a) loans, which are already 75 percent guaranteed by the agency.
According to Mills, the enhanced 90 percent guarantee would prompt greater lending by Rhode Island banks, which would see even less risk extending funds to small businesses as a result.
In fact, the state already saw success improving lending rates when the SBA increased its own guarantee to 90 percent. Between October and the end of December last year, Rhode Island banks doubled their amount of SBA-backed lending, from 122 deals worth $36.22 million to 187 deals worth $71.48 million.
Some famous faces have already benefited from the program, such as Red Sox pitcher Curt Schilling's video game company, 38 Studios, which received a $75-million loan guarantee from the state, the Providence Journal reports.
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