The new law is designed to increase access to capital and loans for growing small businesses and includes eight tax cuts targeted at creating new jobs.
Among the most important changes made by the SBJA are increases to the maximum loan sizes available to small businesses and an expansion of the number of businesses eligible for loans from the federal Small Business Administration (SBA).
“(The SBJA) is absolutely a net positive,” said Adrien Burney, senior vice president of the Nevada State Development Corporation, a nonprofit organization that provides commercial real estate loans to small- and medium-sized businesses. “It will allow larger business to come in and borrow.”
Burney said that when the commercial real estate market was strong just a few years ago, businesses struggled to gain more capital for new development projects because they had reached their SBA loan threshold. She said the same is true now that businesses are mired in an economic recession, but that a $3 million increase in 504 commercial loan limits could be a catalyst for recovery.
The loan program also benefits in other ways from the SBJA.
“Most significantly is the ability for business owners to refinance their building with a 504 loan,” Burney said.
Many business owners are concerned that banks will not dabble in refinancing options, Burney said, and the SBJA opens a new avenue through the SBA by which to refinance loans.
However, for all the possible benefits associated with the new law, skepticism lingers.
“The intent (of the SBJA) is good from the perspective of getting more capital in the hands of businesses,” said Sam Males, executive director of the Nevada Small Business Development Center at the University of Nevada, Reno. “But the question remains: Are banks going to participate?”
Males said that whether banks participate and extend new loans to small businesses depends on the most persistent and determinate market force — confidence. Without it, uncertainty about the economy and reluctance to approve new loans will remain the norm.
The signing of the SBJA cleared an extensive queue resulting in the distribution of approximately $970 million for nearly 2,000 small business loans.
The SBA reported Thursday that its growth capital program provided a record $1.59 billion in fiscal year 2010 to help small businesses expand and create jobs, a 23 percent increase over the previous year.