Within a month of the American Recovery and Reinvestment Act being signed into law, the Greater Omaha Chamber's small business members will have a chance to take advantage of it. The funds will be disbursed in a variety of programs and incentives to be offered through the U.S. Small Business Administration and made available through local community banks and credit unions.
"We're eager to get this money out to Nebraska's small businesses where it can do the most good," said Leon Milobar, district director of the U.S. Small Business Administration Nebraska District Office. His office has received an average of 110 to 120 calls per week from small businesses and lenders since the bill was signed Feb. 17.
He says the two key provisions of the Recovery Act will be especially beneficial to area small businesses whose loan terms typically range from five to 25 years. The first is a temporary elimination of certain loan fees that banks charge borrowers. The second raises the guarantee levels on longer-term loans to 90 percent of the loan value, up from 75 percent.
According to Mary Ann O'Brien-Elkjer, chairman of the Chamber's Small Business Council and CEO of Omaha-based OBI Creative, area small businesses will be glad to get it.
"Omaha's small businesses continue to look for opportunities to grow and expand. The availability and affordability of financing is important in their ability to do so. The Recovery Act allows small businesses to put this new source of financing to work - along with creating jobs that put people to work, too," she said.
The anticipation was evident in the questions and comments voiced at a meeting between local SBA representatives and area small business owners held recently at the Chamber's west office.
"Many expressed frustration over the impact that poor economic conditions on the coasts were having here, where businesses had always taken a conservative approach to borrowing," said Larry Gomez, director of small business services at the Chamber. "It was not only creating a squeeze on the availability of financing, but also a delay in getting timely decisions on applications that wouldn't have been a problem last year."
Yet, even as businesses have awaited passage of the legislation, loan activity in the Omaha area has remained healthy compared to other areas of the country. In fact, Milobar says the Nebraska District Office saw a decline of only 13 to 14 percent from last year. However, last year also represented one of the district's most active since its inception.
"People are doing business. The average loan size is up. Many are in the process of expanding existing businesses. Improving credit availability will help them to access the funds they need," Milobar said.
Other Midwestern cities have not fared so well. In fact, the St. Louis area has seen its loan activity off by 50 percent and the region as a whole is experiencing a 30 percent decrease in activity.
"Omaha is also one of the few metropolitan areas expected to grow," he said. The steady local employment figure is one of the measures of the economic stability.
Another key impact of the Act is the ability to refinance existing loans, although there has not been a lot of demand for this among borrowers to date.
"It's not surprising," Milobar said. "Even in the best of economic times, borrowers here have always been required to demonstrate their credit worthiness. For most, it has been the availability of credit that has been the concern lately, not the ability to pay it back."
For additional information, contact the U.S. Small Business Administration, Nebraska District Office at (402) 221-4691 or your local bank or lender.
View the American Recovery and Reinvestment Act FAQs.
Make sure you're ready
If you're a small business considering a project, a new business or expansion of an existing business, the Recovery Act may provide you with the financing you need to move forward.
"The process is really lender driven. We encourage you to develop a detailed business plan and talk to your lender," said Mike Niehaus, lead lender relations specialist for the SBA Nebraska District Office. "Together, you can consider if an SBA guarantee will make it work better for you."