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THE WHITE HOUSE

Office of the Press Secretary

For Immediate Release September 18, 1998

                     THE CLINTON ADMINISTRATION:
                HELPING SMALL BUSINESSES START AND GROW
                         September 18, 1998

President Clinton and SBA Administrator Alvarez are making it easier for lenders to make SBA-backed loans to smaller firms, allowing these businesses to expand, create jobs and generate wealth. Today, the President and Administrator Alvarez unveiled changes to two existing programs, SBALowDoc and SBAExpress, that will make an additional $1 billion in guaranteed loans available to small businesses, especially those in lower-income areas and those owned by minorities or women. These new initiatives build on the Clinton Administration's work over the past six years to increase the availability of credit to small businesses through, among other avenues, lower interest rates and more effective SBA programs.

By modifying two existing programs, SBALowDoc and SBAExpress, the Small Business Administration will make an additional $1 billion in guaranteed loans available to small businesses, including minority and women-owned firms, businesses located in poor rural areas and inner cities, and smaller start-ups of all kinds.

The maximum loan size under the two programs will be increased from $100,000 to $150,000 and the turnaround time for applications will be reduced to no more than 36 hours.

SBA will make the SBAExpress program (previously known as FA$TRAK) available to as many as 500 lenders, up from 18 at present.

The improvements to these two programs will offer small businesses easier access to the capital and credit they need to start, build and grow their businesses into the 21st century.

Under SBAExpress, lenders are allowed to use their own forms and procedures, rather than the standard SBA forms and process, to approve SBA-guaranteed loans of up to $150,000. In exchange for this greater flexibility and reduced loan processing costs, lenders accept a 50 percent SBA guarantee rather than the usual 75-80 percent.

Opening up the program to additional lenders, generally those who have performed exceptionally well under SBA's standard guaranteed lending program, should greatly expand the availability of smaller loans, which would be particularly helpful to firms owned by women, minorities and veterans, as well as those located in poorer urban and rural areas -- SBA's "new markets."

A new revolving credit feature will be added to SBAExpress, making the dollars readily available when businesses need them. This improvement is in response to recommendations arising from forums sponsored by SBA, the National Women's Business Council and the Federal Reserve Bank on access to capital for women-owned businesses.

SBALowDoc, which was launched in December 1993 under the leadership of then-SBA Administrator Erskine Bowles, is open to all SBA lenders. It streamlines the application process, thereby expanding the marketplace for smaller commercial loans.

SBA is also developing electronic applications for SBALowDoc and SBAExpress , which will allow participating lenders to apply through the Internet. SBA will closely monitor the loan portfolio performance under these programs, to ensure that the streamlining does not adversely impact the quality credit standards required by SBA.