Recovery Act Overview

 The American Recovery and Reinvestment Act is an unprecedented effort to jump-start our economy, 

create or save millions of jobs, and ensure our nation can meet the challenges of the 21st century. The 

Recovery Act assigns a key role in this effort to the U.S. Small Business Administration, providing it 

with program tools that offer new economic incentives to small businesses and lenders alike, all aimed 

at growing our economy through job creation, re-starting lending, and investing in small businesses 

and the entrepreneurial spirit of Americans.

The Recovery Act takes a comprehensive approach to several problems facing small Business today. 

The Act:

•	 Provides entrepreneurs and lenders financial relief from the current economic crisis that will help

encourage borrowing and lending to all small businesses, including start-ups

•	 Offers businesses access to the capital and the tools they need to drive economic recovery and to

create and retain jobs

•	 Helps unlock credit markets for small businesses

•	 Temporarily eliminates some loan fees for borrowers and lenders

The bill is divided into nine key components, including:

•	 Temporary Elimination of Loan Fees

•	 Temporary 90 percent Guarantees

•	 Secondary Market Liquidity for Section 7(a) loans, SBA’s largest loan guarantee program, which

serves a wide variety of small business borrowing needs

•	 America’s Recovery Capital (ARC) Stabilization Loans

•	 Expanded Microloans

•	 Surety Bond Program Expansion

•	 Secondary Market for First Mortgages associated with Section 504 Certified Development

	 Company loans, which support small business capital-asset and real-property investments

•	 Expanded Refinancing Project for Section 504 Loans

•	 Small Business Investment Company Program Expansion

SBA is working to implement these elements with the goal of having the broadest impact on small 

businesses as rapidly and effectively as possible.
 Understanding the SBA Programs in the Recovery Act

•	 For small businesses, the Recovery Act temporarily eliminates SBA guaranteed 7(a) and 504 loan

	 fees and offers tax benefits. For lenders, it temporarily eliminates loan fees on Section 504 loans. The fee

	 eliminations are retroactive to Feb. 17, 2009, the day the Recovery Act was signed. The Act also

	 provides guarantees up to 90 percent on some types of 7(a) loans to qualified small businesses. The

	 temporary loan fee eliminations and 90 percent guarantee provisions will apply to approximately

	 $8.7 billion of 7(a) loans and $3.6 billion of 504 loans. SBA estimates this will cover lending in both

	 programs through calendar year 2009.

•	 SBA is developing a loan program created by the Recovery Act to temporarily assist broker-dealers who

	 buy guaranteed 7(a) loans, which will help restore the secondary markets for 7(a) loans. In addition, the

	 Treasury will commit up to $15 billion in TARP funds to further help unfreeze the small business

	 lending market by purchasing pooled 7(a) loan guarantees and 504 first mortgages. These actions will

	 benefit community banks, credit unions and other small lenders.

•	 America’s Recovery Capital (ARC) loan program will offer deferred-payment loans of up to $35,000

	 backed 100 percent by SBA to viable small businesses that need help making payments on an existing,

	 qualifying loan for up to six months. This new program is intended to give small businesses some

	 temporary financial relief to keep their doors open and get their cash flow back on track so they can

	 maintain existing jobs and ultimately create new jobs. Repayment does not begin until 12 months after

	 the loan is fully disbursed. (ARC loans cannot be made to cover payments on an existing loan that was

	 guaranteed by SBA before Feb. 17, 2009, the day the bill was signed into law.)

•	 Expanding SBA’s microloan program provides extra funding for SBA-backed microlenders across the

	 country. The bill provides enough for $50 million in new SBA microloans, which are delivered by non-

	 profit, community-based intermediary lenders across the country. These loans can be for up to $35,000

and come with technical assistance and training for every borrower.

•	 Expanding Surety Bond Program limits will help small businesses compete for the billions of dollars in

	 contracts that are needed to implement the Recovery Act. By raising the maximum amount for contracts

	 that qualify for SBA surety bonds to $5 million, and up to $10 million for certain contracts, more small

businesses will be able to help drive economic recovery.

•	 A new program to guarantee Section 504 program first mortgages will provide fresh liquidity to the first

mortgage market. Through this program SBA will establish a process for private sector entities to apply

	 for federal guarantees on pools of first lien position Section 504 loans.

•	 A new Section 504 refinancing program will help expand existing long-term projects by working with

	 Certified Development Companies to restructure and refinance certain existing loans into SBA-backed

	 504 loans.

•	 The Recovery Act also enables SBA to expand its Small Business Investment Company

	 debenture program to assist this source of venture capital. The SBIC office is working on the necessary

	 regulations and notices for licensees alerting them that they may be eligible for additional SBA financial

	 assistance and, also, that they will be required to invest 25 percent of their financing dollars in “smaller”

enterprises.

For more information about the programs offered by the SBA under the Recovery Act, visit the SBA Web

page at www.sba.gov/recovery, contact the SBA Answer Desk at 1-800-U-ASK-SBA, or contact your 

local SBA District Office. For more information about the provisions of the broader Recovery Act, visit

www.recovery.gov.

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