Stimulus Funds To Small Businesses Dries Up Two provisions in the federal stimulus package which were aimed at helping small businesses are out of money. The Small Business Administration used the measures to make it easier for banks to make loans, and for small businesses to get them. The lack of funding could set the stage for further business credit contractions.

Stimulus Funds To Small Businesses Dries Up

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Now, some small companies have gotten help from the federal stimulus package. A couple of provisions made it easier for companies to get loans through their banks, but now these programs are out of money.

Kirk Siegler of member station KUNC has more.

KIRK SIEGLER: Say you're a small business wanting to expand and your local bank is flinching at giving you a loan because lending restrictions are now tighter. But what if the government was willing to back up the risk of nearly all of your loan? Would banks be more willing to extend credit? Yes. And, in fact, bank have, says Jonathan Swain.

Mr. JONATHAN SWAIN (Spokesman, Small Business Administration): These loans that we've been able to do in the Recovery Act have been a real lifeline.

SIEGLER: Swain is a spokesman for the Small Business Administration. His agency has spent the last of $375 million meant to raise the maximum guarantee on SBA loans and help reduce some loan fees.

Mr. SWAIN: We've had a real impact, been able to get some much needed capital out and in the hands of small businesses all across the country to help them keep their doors open, keep their employees working, and in some cases even create new jobs.

SIEGLER: Banks making the loans have also praised the provisions. But Horace McCowan, vice president for KeyBank, Colorado, says their expiration may not be the end of the world.

Mr. HORACE MCCOWAN (President, KeyBank): Hopefully, this means the government is sensing that the economy is recovering, and these types of special stimuluses(ph) may not be necessary.

Mr. SIEGLER: Still, the SBA is lobbying Congress for more money to keep the program going through February.

For NPR News, I'm Kirk Siegler in Denver.

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