) -- The Small Business Administration has run through its $375 million in stimulus cash in less than nine months -- a sign of how
desperate small businesses are to obtain fresh capital
, and how unwilling banks are to lend without government support.
Congress authorized the funds in February to cut fees and increase government guarantees on small-business loans for a period of one year. Those incentives have led big banks like
Bank of America
, regional lenders like
and others to extend more credit to cash-starved businesses around the country, although small-business lending is still down over the past year.
The SBA had expected the funds to last through December, but told businesses earlier this month that the deadline for loans under the stimulus program would be hastened to Nov. 23. SBA spokesman Jonathan Swain says the announcement led to a "run on the bank" of sorts, with applications filed for $1.1 billion worth of loans in a single week. The sum is more than any single monthly total for the first half of the year.
But while the pace of lending has accelerated, it still hasn't fulfilled small business' thirst for capital. SBA loans for the fiscal year ended Sept. 30 declined by 27% to $9.3 billion from $12.7 billion the previous fiscal year. The number of loans fell to 44,221, down 36% from the prior period.
Small businesses that wanted loans under the recovery program but couldn't get in under the clock are now waiting on a queue, according to Swain. If any of the earlier loan grants fall through because a project is canceled or a business decides it no longer wants the funding, those in line may be able to get some of the stimulus cash.
The SBA has also requested that Congress grant additional funding so that the program can run its course through Feb. 16.
"We know there is still more work to be done and we will continue our efforts to keep America's small businesses on a path to recovery and long term success," SBA Administrator Karen Mills said in a statement on Nov. 11.
-- Written by Lauren Tara LaCapra in New York