SBA To Temporarily Change Size Standard For Loan

NEW YORK (AP) — The Small Business Administration said Friday that it will temporarily change the size standard on one of its loans, allowing more than 70,000 additional small businesses access to additional capital.

The move, which comes on the heels of Chrysler LLC's bankruptcy protection filing on Thursday, is expected to help auto dealers and suppliers as well as recreational vehicle dealers and others struggling under the weight of the recession.

The SBA has made similar moves in the past. In 2005 the organization worked to help businesses dealing with the aftermaths of Hurricanes Katrina and Rita and in 1993 it responded to the recession of the early 1990s.

The SBA will temporarily alter the size standard of its 7(a) loan, giving companies the ability to qualify for the loan based on net worth and average income. Companies that apply, along with their affiliates, cannot have a combined net worth of more than $8.5 million. Average net income after federal income taxes for the preceding two fiscal years cannot exceed $3 million, excluding carry-over losses.

"We have seen signs that small businesses that are just outside the traditional 7(a) size standard are being shut out of the conventional lending market. This temporary change will help those businesses weather these tough times and help move our nation closer to economic recovery," SBA Administrator Karen Mills said in a statement.