For the business owners out there, not all news stories are bad – especially not this one.
Attention small business owners, says the SBA: “help is coming” – well, some help is better than no help.
While it may not be enough, President Barack Obama announced a plan to inject $15 billion into the small business loan market to be used for the purchase of Small Business Administration backed securities as part of their guaranteed-loan programs. What does that mean? For small business owners, it means more credit is available and previously unavailable loans from earlier this year may also be available at this time.
Two important provisions are included in the SBA’s new plan:
- SBA loans will have their fees waved until the end of 2009. Fees associated with generating a new SBA loan range from between 2 percent and 3.7 percent for a 7a loan and 1.5 percent for 504 loans therefor, this is a big savings
- The SBA will increase the portion of every 7a loan they guarantee from 75 percent to 90 percent resulting in a more attractive opportunity for banks to participate in SBA lending
Little has changed in that applicants still need a viable business plan forecasting their ability to repay and assets will still be a required pledge as collateral.
What has changed, however, is a new an incentive for small business owners to apply for a loan within the next 8 months while the fees are waived and more credit is available in the secondary credit market. For business owners considering expansion or possible investment plans, now may be a good time to act.
Full article: SBA guarantees loans for small businesses