Small businesses in Michigan have an opportunity to thrive even in challenging economic times. Thanks to the American Recovery Act signed into law by President Obama earlier this year and changes in the Small Business Administration (SBA) program, small businesses have some exciting options to consider as they move their businesses forward.

The SBA temporarily eliminated fees for the 7A Loan Program, which provides loans from $10,000 to $2 million dollars. For example, a small business borrowing $1 million dollars to purchase a building through the 7A Loan Program prior to the economic stimulus bill would have paid an SBA guarantee fee of $26,250. This fee has been temporarily eliminated. The temporary elimination of the guarantee fee will end on September 30, 2010 or when the appropriations funds are spent which could be at the end of this year. Approximately $350 million dollars were allocated to offset these fees. Once those fees are utilized - it will go back to a full fee program.

The 7A Loan Program also can provide both revolving lines of credit up to $350,000 and term loans up to $2 million dollars. The 7A loans can be used for eligible business purposes including: a building purchase, equipment purchase, permanent working capital (cash), refinancing existing debt and business acquisition.

In addition, the SBA 7A loan program increased the guarantee percentage that banks get from 75 to 90 percent. This increase in guarantee percentage enables banks to look at loan applications that might not have been considered previously.

SBA also adopted an alternative size standard in determining if a small business qualifies for a SBA loan. (Size standards represent the largest size that a business may be to remain classified as a small business). Currently, there is a size standard of a maximum $3 million dollars in net income after tax - averaged over two years with a maximum tangible net worth of $8.5 million dollars. This temporary alternative size standard opens up the SBA products to many more businesses who wouldn't have qualified based on the previous standard number of employees or revenue in their business.

Another significant change occurred with the SBA 504 program, which is a program that historically has been used to finance the purchase of hard assets - either real estate or equipment. The lender fee and the borrower fee have been temporarily eliminated.

The program was further enhanced to also allow banks to do debt re-finance of existing hard asset term debt in the SBA 504 structure. A bank can do debt re-finance up to 50 percent of the new loan amount for new real estate or new equipment.

For example, under the SBA 504 structure, for a small business purchasing $1 million dollar's worth of new equipment, a bank also can re-finance up to $500,000 dollars in existing hard asset debt that the client has and can wrap it up in that 504 structure, which provides access to long-term fixed rates.

The SBA is a wonderful resource with many incredible programs that can help small businesses in Michigan thrive today and tomorrow.

Tom Zernick is Head of SBA Lending at Citizens Bank.