Top SBA Lenders Could Benefit From Coronavirus Stimulus

Whether through the $1 trillion stimulus package or a separate bill, it is clear that the U.S. Small Business Administration is about to get a whole lot more funding authority in order to help businesses affected by coronavirus. President Trump has already instructed Congress to increase the SBA's funding authority by $50 billion, although when it is all said and done it could be much more.

The SBA has many different loan programs, but the fundamental idea behind all of them is that the government will usually guarantee anywhere from 50% to 90% of these loans, encouraging lending to riskier borrowers. The new money given to the SBA is going to be backed heavily by the government, probably in the realm of 90% or 100%. It will allow the SBA to lend it out to businesses for more widespread use and the loan amounts will likely be greater. This should be a boon to banks that are SBA-preferred lenders, such as Live Oak Bancshares (NASDAQ: LOB), Wells Fargo (NYSE: WFC), Huntington Bancshares (NASDAQ: HBAN), and U.S. Bancorp (NYSE: USB).

Image source: Getty Images.

Continue reading

Source Fool.com