WASHINGTON, Nov 03, 2008 /PRNewswire-USNewswire via COMTEX/ -- Small Businesses Can't Wait for the Rescue Package to Reach Them
In a letter to the Small Business Administration's (SBA) Acting Administrator Sandy Baruah, Sen. John Kerry, Chairman of the Senate Committee on Small Business and Entrepreneurship, along with Sen. Chuck Schumer, outlined steps the agency should take immediately to help entrepreneurs.
"Experts say it will take months for the rescue package to reach small businesses," said Kerry. "But small businesses can't wait any longer for a lifeboat to arrive. They need help now and the SBA has that power."
To help, Kerry urged the SBA to first make bridge loans available through the disaster loan program, as was done following 9-11. This would provide immediate help to small firms because the government would disburse the loans directly and businesses won't need to wait for the rescue package to reach private lenders. Next, the SBA should change their 504 loan program to allow borrowers to refinance and access some of the equity they've built up in their businesses. This has been done on a case-by-case basis in the past and is necessary now because even good borrowers don't have the funds needed to make it through this recession or expand their business. Finally, the SBA should stabilize their largest lending program.
Kerry has seen no action from the administration since sending a letter to President Bush two weeks ago urging him to encourage the SBA to step in. In addition to letters and hearings that pushed for action over the past year, Kerry also introduced the Small Business Lending Market Stabilization Act of 2008 in September, which temporarily suspends fees for government-guaranteed small business loans. Senator Obama has proposed a similar measure.
"The Administration has failed to listen to my warnings in the past," said Kerry. "My hope is that they'll see the desperate state small firms are in and take steps to inject needed capital into the hands of entrepreneurs, capital needed to pay their employees, stock their shelves and keep the lights on through the holiday season."
"The small business sector in this country is the engine of economic growth, and we need to keep the engine running during this financial crisis. The best way to do that is through expedient, targeted and effective lending through the SBA," said Schumer.
Below is the letter with details of the requests:
November 3, 2008
The Honorable Sandy K. Baruah
Acting Administrator
U.S. Small Business Administration
409 Third Street, S.W.
Washington, D.C. 20416
Re: Emergency Changes to SBA Credit Programs
Dear Mr. Baruah:
For almost a year now, Congress has been warning the Administration and the SBA of a credit crunch for small businesses. Now we are hearing from many of our constituents that our worst fears are being realized, and many small businesses are in danger of closing their doors if they cannot secure additional financing.
SBA loan guaranty programs historically have been counter-cyclical, when the private sector decreases small business lending, the demand for government-guaranteed loans increases. However, as the economy started to falter last year, the demand for SBA loans decreased instead of the increase we would have expected. Congress said the decline in SBA lending was a bellwether for the conventional market, and it has been proved right: SBA lending from those first warnings declined from 12 percent to more than 30 percent, and lending to small businesses through conventional loans, as reported in the Federal Reserve's third quarter lender survey, has dropped from 33 percent to 65 percent. Since the major collapse of the financial markets on September 15th, SBA lending has declined more than 50 percent.
No longer can the Administration claim that cuts in the interest rates are sufficient to turn around the SBA lending decline. The rate cuts are actually exacerbating the problems in the SBA programs because it is causing lenders to lose money on SBA loans and driving them out of the program. Not only have many of SBA's private sector lending partners cut back or discontinued making SBA loans, but they are also starting to lay off staff, which means SBA is losing the private-sector capacity to market, process and service loans when the economy needs to be increasing lending. Essentially, the SBA is working at cross purposes with Treasury in its efforts to implement the financial rescue package and unfreeze the credit markets.
Experts are predicting it will take months for the effects of the $700 billion rescue package to reach small businesses, time they don't have. Most small businesses do not have the reserves to wait months for access to capital, and they shouldn't have to wait since the SBA has the authority to make loans available to small businesses immediately through its disaster loan program and temporarily tailor the 7(a) and 504 loan guaranty programs so that the private sector starts making these loans again and the secondary market for SBA loans is active again. As was reported in the American Banker yesterday, Unity Bancorp Inc. in Clinton, N.J., one of the SBA's most active lenders among community banks, started an aggressive expansion of its SBA lending a year ago, but last week announced that it shut down eight SBA loan offices in seven states outside its market area, and laid off 10 of its 12 SBA lenders.
Bridge Loans. The most obvious and immediate way to get credit to small businesses suffering substantial economic injury due to the credit crisis is to make bridge loans available through the SBA's economic injury disaster loans, as the Administration did after 9-11. As you know, the Administration has the authority to make these loans and does not need Congressional action. Furthermore, because the SBA makes these loans directly instead of using the private sector to deliver them, this is a quick way to get loans to businesses because they do not need to wait until banks have liquidity freed up through the rescue package to make loans again. Based on the information we have from the SBA, another benefit to using this resource is that it is sufficiently funded to make bridge loans for the economic crisis and still help victims of recent disasters. Congress greatly increased the lending capacity of the SBA's disaster loan program last month when it appropriated almost $500 million in additional funding, giving the agency the potential to lend more than $6.8 billion in emergency loans this year. There is still $6 billion available, far more than the volume of economic injury disaster loans made nationwide after 9-11. The SBA should have the capacity to handle efficient processing and disbursement of such loans based on its much-publicized disaster loan program improvements and recent trends for hurricanes, floods, and fires. Should the SBA need more assistance beyond its existing reserve loan staff, it has all the authority it needs to enlist the help of private lenders through comprehensive disaster reform enacted as part of P.L. 110-234, signed into law in May.
Change to the 504 Loan Guaranty Program. Another way SBA could help small businesses is by temporarily changing its internal policy on 504 loans to allow some existing 504 borrowers to either refinance their unguaranteed first mortgage or obtain another bank loan that SBA would agree to subordinate to the existing 504 second mortgage. This change would enable the borrower to obtain a reasonable amount of cash from its existing business property equity. We are hearing from Certified Development Companies that this change would be helpful to small businesses in today's economy, where even good borrowers are having difficultly obtaining funds for a sound business purpose, such as for expansion or for working capital to make it through this economic downturn. We understand that SBA has done this on a case-by-case basis in the past, and that it does not require a regulatory or statutory change. There are pros and cons to such a change, but SBA could establish guidelines for such loans that would give adequate protection to the 504 portfolio and ensure that the borrower is in a demonstrable position to repay the increased debt.
Changes to the 7(a) Loan Guaranty Program. The SBA could help stabilize lending in its largest loan program by making three sensible programmatic changes, many of which its lending partners and Congress have been seeking since 2007 through S. 1256, S. 2920, and S. 3596. One, SBA should allow weighted average coupons to sell SBA loans on the secondary market. The current requirement that all loans in the pool be the same interest rate is outdated compared to most non-SBA security pools, and, in this climate, is contributing to the complete paralysis of the SBA 7(a) secondary market. The assemblers of the pools believe that using a weighted average coupon, which means loans of different interest rates can be pooled and sold together, will provide efficiency in the process and ultimately move the pool to the marketplace faster. Two, we urge the SBA to make a regulatory change to adopt an alternative interest rate index other than PRIME. As you know, lenders are currently required to charge an interest rate based on PRIME. This does not always give the borrower the best rate and it is incompatible with the rate standard used by many SBA lending partners. Third, we urge the SBA to temporarily adjust the maximum rate cap for the loans to recognize that the current structure, in this environment, actually drives away lenders because they can't even break even when they make an SBA loan.
Time is of the essence for the Administration to use its authority and make these changes. With more than $6 billion in the disaster loan program available for bridge loans to businesses suffering substantial economic injury, and authority to back up to $25 billion in small business loans available through the SBA's 7(a) and 504 loan guaranty programs, the SBA is in a position to help small businesses survive the current recession. Thank you for your attention to these matters, and we hope that you will consider taking these steps as soon as possible. We look forward to hearing from you soon.
Sincerely,
John F. Kerry
Charles E. Schumer
SOURCE U.S. Senate Committee on Small Business & Entrepreneurship
Copyright (C) 2008 PR Newswire. All rights reserved
Tuesday, December 23, 2008
Friday, December 5, 2008
Who are banks and lenders making loans to right now?
Who are banks and lenders making loans to right now?
It has become very difficult recently to get money for anything. Banks and lenders have tightened restrictions to the point that for most normal people it is close to impossible to get a loan. Or, if you do manage to get one, you have been pulled through the ringer and been squeezed so tight it's painful. One of the worst stories we have heard recently was a client who began a pretty normal home purchase (primary residence) in October 2007, and finally got it closed in August 2008. Ten months to get a home mortgage for a primary residence. He had to give the lender everything short of a DNA sample to get it done as they had a never ending list of conditions.
So how do you get loans right now? Well, despite the credit crisis in the general consumer lending divisions, the business and commercial lending divisions of most banks are getting busier. Why? Banks still have to lend or they don't make money. So what does it take to get these loans? Generally banks and lenders are looking at the personal credit score of the business owner and the age of the business. Most of the business and commercial loans being made right now do require personal guarantees from the business owner, therefore personal credit is extremely important. Generally a 680 FICO or higher is the starting point. A score lower than 680 makes it a lot more difficult. The age of the business is the other critical factor. Generally banks begin the lending process with businesses that are 2 years old or older, and lately many banks and lenders like to see businesses that are closer to 3 years old.
What if your businesses hasn’t “seasoned” and isn’t that old yet? Or what if you haven’t even set up your LLC yet? Stewardship Business Brokers has your solution. We specialize in brokering seasoned LLCs between 2 and 4 years old, a vital component for you to acquire financing. We get new ones in each week, but they go very quickly, so act fast. Visit us at www.stewardshipbrokers.com to get started.
What if you don't have a 680 FICO score? Again we have your solution. We have a great network of professionals in various areas of the financial world that can help. There are many ways to increase your credit score, undoubtedly you have heard and seen advertising for credit repair all over the place. Some of those services are great, some aren't worth anything. It is hard to know. The services we use and refer our clients to work, period. Visit us at www.stewardshipbrokers.com to learn more.
What if you have a good score and already have a seasoned business? Great! Honestly you don't need us. With some well spent time researching, you can find lenders and go through the application process on your own and probably get a couple of the business lines of credit. However, if you want some guidance and help through the process, or don't have the time to do it yourself, or you just want the benefit of our established relationships with lenders, we can help you there too. Our system works. Every client who has asked for our help has acquired at least $40,000 in lines of credit. Several have achieved much higher. Typically you can expect between $40,000 on the low end and $200,000 on the high end. Though there are no guarantees for funding, our track record has been great.
Visit to get started. If you would like a consultation to find out how Stewardship Business Brokers can help your specific situation please call 801-691-9771 or send us an email to info@stewardshipbrokers.com.
Stewardship Business Brokers
Your Business is Our Business
It has become very difficult recently to get money for anything. Banks and lenders have tightened restrictions to the point that for most normal people it is close to impossible to get a loan. Or, if you do manage to get one, you have been pulled through the ringer and been squeezed so tight it's painful. One of the worst stories we have heard recently was a client who began a pretty normal home purchase (primary residence) in October 2007, and finally got it closed in August 2008. Ten months to get a home mortgage for a primary residence. He had to give the lender everything short of a DNA sample to get it done as they had a never ending list of conditions.
So how do you get loans right now? Well, despite the credit crisis in the general consumer lending divisions, the business and commercial lending divisions of most banks are getting busier. Why? Banks still have to lend or they don't make money. So what does it take to get these loans? Generally banks and lenders are looking at the personal credit score of the business owner and the age of the business. Most of the business and commercial loans being made right now do require personal guarantees from the business owner, therefore personal credit is extremely important. Generally a 680 FICO or higher is the starting point. A score lower than 680 makes it a lot more difficult. The age of the business is the other critical factor. Generally banks begin the lending process with businesses that are 2 years old or older, and lately many banks and lenders like to see businesses that are closer to 3 years old.
What if your businesses hasn’t “seasoned” and isn’t that old yet? Or what if you haven’t even set up your LLC yet? Stewardship Business Brokers has your solution. We specialize in brokering seasoned LLCs between 2 and 4 years old, a vital component for you to acquire financing. We get new ones in each week, but they go very quickly, so act fast. Visit us at www.stewardshipbrokers.com to get started.
What if you don't have a 680 FICO score? Again we have your solution. We have a great network of professionals in various areas of the financial world that can help. There are many ways to increase your credit score, undoubtedly you have heard and seen advertising for credit repair all over the place. Some of those services are great, some aren't worth anything. It is hard to know. The services we use and refer our clients to work, period. Visit us at www.stewardshipbrokers.com to learn more.
What if you have a good score and already have a seasoned business? Great! Honestly you don't need us. With some well spent time researching, you can find lenders and go through the application process on your own and probably get a couple of the business lines of credit. However, if you want some guidance and help through the process, or don't have the time to do it yourself, or you just want the benefit of our established relationships with lenders, we can help you there too. Our system works. Every client who has asked for our help has acquired at least $40,000 in lines of credit. Several have achieved much higher. Typically you can expect between $40,000 on the low end and $200,000 on the high end. Though there are no guarantees for funding, our track record has been great.
Visit to get started. If you would like a consultation to find out how Stewardship Business Brokers can help your specific situation please call 801-691-9771 or send us an email to info@stewardshipbrokers.com.
Stewardship Business Brokers
Your Business is Our Business
Tuesday, December 2, 2008
Institutions Failing and Government Bail-outs
Institutions Failing and Government Bail-outs.
How that's Good News for Business Owners:
"US opens up capital spigot to banks, eyes insurers
WASHINGTON (AFP) — The US bank rescue program
kicked into gear Monday with news that nine major banks
will receive 125 billion dollars in capital injections this
week from the government. Several smaller banks also
announced plans to join the program in which the Treasury
would purchase shares to help free up funds to ease a credit
squeeze. Assistant Treasury Secretary David Nason told
CNBC television that "we executed the agreements for
the nine (major) institutions late last night so the money
will go out the door for these institutions early this week."
The nine will get half of the 250 billion dollars to be invested
by the government in the banks as part of a massive rescue
of the financial system. The nine banks are Citigroup,
JPMorgan Chase, Bank of America, Goldman Sachs,
Morgan Stanley, Wells Fargo, Bank of New York Mellon, State Street
and Merrill Lynch, soon to be taken over by Bank of America.
The remaining 125 billion dollars will go to smaller banks and
lenders which agree to the capital for equity program, which
includes mandated limits on executive compensation. The Financial
Services Roundtable said 16 regional banks had received preliminary
approval for a total of 34.6 billion dollars in capital. The capital
injections are from a 700-billion-dollar US government rescue plan
approved by Congress that had initially focused on the problem of
liquidity for banks by offering to buy up their toxic assets."
Copyright © 2008 AFP - October 27, 2008
What does this mean for business owners? It is Good News! Simply
put, it means that banks are starting to receive their portion of the
$700 Billion federal bailout package, and that means they are now
liquid and have money to lend. As we have mentioned in a previous
email, lenders are still in the business of lending money, otherwise they
make no profit. With traditional consumer lending like mortgages and
car loans becoming increasingly difficult to do, many lenders have really
increased their business lending divisions. And with the recent infusion
of cash into the system, this is good news for you!
To get started and to learn more visit www.stewardshipbrokers.com
The credit crisis, and especially the liquidity crisis that has come as a result,
have put a major damper on economic growth. The fed and the financial
industry are scrambling to keep the economic machine running to avoid an
outright recession and to help businesses continue to grow and operate.
As all business owners know, access to cash is the life blood of the business.
Many businesses have been feeling the pinch lately as consumers adopt the
'hunker down and wait' attitude. Unfortunately for the small business owner
the bills and obligations don't stop just because consumers aren't shopping as
much. Access to cash is incredibly valuable in times like this. Use it as a bridge
to cover payroll for awhile, start that marketing campaign you've been putting off,
make the vital investment to ramp up your business, or just keep it handy for
whatever may come down the road.
Visit www.stewardshipbrokers.com to get started. If you would like a consultation
to find out how Stewardship Business Brokers can help your specific situation
please call 801-691-9771 or send us an email to info@stewardshipbrokers.com.
How that's Good News for Business Owners:
"US opens up capital spigot to banks, eyes insurers
WASHINGTON (AFP) — The US bank rescue program
kicked into gear Monday with news that nine major banks
will receive 125 billion dollars in capital injections this
week from the government. Several smaller banks also
announced plans to join the program in which the Treasury
would purchase shares to help free up funds to ease a credit
squeeze. Assistant Treasury Secretary David Nason told
CNBC television that "we executed the agreements for
the nine (major) institutions late last night so the money
will go out the door for these institutions early this week."
The nine will get half of the 250 billion dollars to be invested
by the government in the banks as part of a massive rescue
of the financial system. The nine banks are Citigroup,
JPMorgan Chase, Bank of America, Goldman Sachs,
Morgan Stanley, Wells Fargo, Bank of New York Mellon, State Street
and Merrill Lynch, soon to be taken over by Bank of America.
The remaining 125 billion dollars will go to smaller banks and
lenders which agree to the capital for equity program, which
includes mandated limits on executive compensation. The Financial
Services Roundtable said 16 regional banks had received preliminary
approval for a total of 34.6 billion dollars in capital. The capital
injections are from a 700-billion-dollar US government rescue plan
approved by Congress that had initially focused on the problem of
liquidity for banks by offering to buy up their toxic assets."
Copyright © 2008 AFP - October 27, 2008
What does this mean for business owners? It is Good News! Simply
put, it means that banks are starting to receive their portion of the
$700 Billion federal bailout package, and that means they are now
liquid and have money to lend. As we have mentioned in a previous
email, lenders are still in the business of lending money, otherwise they
make no profit. With traditional consumer lending like mortgages and
car loans becoming increasingly difficult to do, many lenders have really
increased their business lending divisions. And with the recent infusion
of cash into the system, this is good news for you!
To get started and to learn more visit www.stewardshipbrokers.com
The credit crisis, and especially the liquidity crisis that has come as a result,
have put a major damper on economic growth. The fed and the financial
industry are scrambling to keep the economic machine running to avoid an
outright recession and to help businesses continue to grow and operate.
As all business owners know, access to cash is the life blood of the business.
Many businesses have been feeling the pinch lately as consumers adopt the
'hunker down and wait' attitude. Unfortunately for the small business owner
the bills and obligations don't stop just because consumers aren't shopping as
much. Access to cash is incredibly valuable in times like this. Use it as a bridge
to cover payroll for awhile, start that marketing campaign you've been putting off,
make the vital investment to ramp up your business, or just keep it handy for
whatever may come down the road.
Visit www.stewardshipbrokers.com to get started. If you would like a consultation
to find out how Stewardship Business Brokers can help your specific situation
please call 801-691-9771 or send us an email to info@stewardshipbrokers.com.
No Doom and Gloom, Only Good News for Businesses
If you are looking for money to start or expand your
business the good news just keeps rolling in. From the
Wall Street Journal:
The recent policy actions are designed to help support
responsible lending activities of banking organizations,
enhance their ability to fund such lending, and enable
banking organizations to better meet the credit needs
of households and business.
http://blogs.wsj.com/economics/2008/11/12/fed-treasury-fdic-urge-banks-to-lend/trackback/
Our take:
· Banks still want to lend
· They want to lend to the right person
· Money is available
· There are still lots of opportunities for business
Stewardship Business Brokers knows what it takes to be the
right person that banks want to lend to. We specialize in helping
you acquire 2 to 4 year-old LLCs then helping you secure financing
for your business projects. Most of our clients are able to get
anywhere from $40k to $200k.
Visit www.stewardshipbrokers.com to learn more, or call 801-691-9771
to schedule a meeting.
business the good news just keeps rolling in. From the
Wall Street Journal:
The recent policy actions are designed to help support
responsible lending activities of banking organizations,
enhance their ability to fund such lending, and enable
banking organizations to better meet the credit needs
of households and business.
http://blogs.wsj.com/economics/2008/11/12/fed-treasury-fdic-urge-banks-to-lend/trackback/
Our take:
· Banks still want to lend
· They want to lend to the right person
· Money is available
· There are still lots of opportunities for business
Stewardship Business Brokers knows what it takes to be the
right person that banks want to lend to. We specialize in helping
you acquire 2 to 4 year-old LLCs then helping you secure financing
for your business projects. Most of our clients are able to get
anywhere from $40k to $200k.
Visit www.stewardshipbrokers.com to learn more, or call 801-691-9771
to schedule a meeting.
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