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Small Business Administration (SBA) loans should be easier to get (theoretically) in the future. According to the Associated Press, the SBA has eliminated fees for its 7a and 504 small business loans. In addition, $15 billion in TARP money will be used to buy current SBA loans from the banks, thereby freeing up capital that can be used for new SBA loans.

The TARP program, which stands for Troubled Asset Relief Program, has gotten a nasty reputation as a bank bailout program funded by the taxpayers. Although there was the expectation that TARP funds would be used to loosen credit to make new loans, the reality is that most recipients have used the funding to shore up liquidity and protect against loan losses.

Perhaps new program changes increasing the amount of each loan the government will guarantee from 75-80% to 90% will help. If the lenders have less risk, they should be willing to make more loans.

For more details, see the Congressional Research Report.

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