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What’s better, a loan guarantee in the hand or a discounted loan guarantee in the bush?

Applicants for loans backed by the U.S. Small Business Administration (SBA) will have to decide whether they’re willing to wait for more fee-waived loan guarantees or move forward with a less-attractive loan guarantee with fees.

Last month the SBA announced it had used up the initial $375 million in stimulus funds that Congress had allocated for a Recovery Loan program that enabled the agency to waive fees and increase the level of guarantees it provides on small business loans through its 7(a) and 504 loan programs.

Beginning Nov. 23, potential borrowers began lining up in a nationwide online queue in the hope that Congress will approve additional funding that could extend the program through mid-February.

The Recovery Loan program has saved Iowa small businesses more than $4.1 million in fees that were waived in fiscal 2009, which ended Sept. 30, said Joe Folsom, director of the SBA’s Des Moines office. “It’s a pretty big chunk of change,” he said. In fiscal 2009, the Iowa SBA office processed 850 loans totaling $210 million, a record dollar amount.

In October, 124 loans totaling $28.3 million were processed for Iowa businesses, and as of Nov. 27, 99 loans for $35 million had been processed in November. Nearly all of those borrowers received the benefit of the fee-waiver program, Folsom said.

Now, borrowers can either opt to have their application put into the queue, or they can apply for a regular SBA loan with fees, Folsom said.

“These are choices they and their lenders are going to have to make,” he said.

Folsom said he has no way of knowing how many Iowa applications are in the queue, which as of the middle of last week contained 639 applications for $260 million.

However, the SBA Web site provides a snapshot of how many applications are in the queue, and even a gauge measuring the likelihood of getting funded. Those with applications in the queue can view their status online by visiting www.sba.gov and clicking on the Recovery Loan Queue button.