That drove up costs, which consequently drove up fees. It has proved successful so far, and participants have an incentive to continue to do well because premier certified lenders can be on the hook for a percentage of a defaulted loan. To give CDCs time and opportunity to recover assets, the bill also requires the agency to give a CDC 90 days notice before selling a defaulted loan. The campaign proved the biggest in the organization s history, according to Crawford. But there are some real benefits to America s small businesses.
Nothing boosts the economy like new jobs created by small-business loans.
The old system had layers of fees, so that for some loans, one fee might apply to one portion of the loan and another fee apply to another. Butler, who has been with the SBA for more than 20 years, said she had to pull out a sheaf of papers to figure out the fees on some loans. We said our goal was to be able to explain our fee structure in one sentence without taking a breath. By offering a greater guarantee on larger amounts, the agency hopes to encourage lenders to make financing available in relatively small amounts, recognizing that for lenders the undertaking is often just as costly as underwriting a larger loan. That increased fee revenue gives the agency a way to offset the increase in the guarantee percentage and amount on smaller loans.