|
|
NEWS
June 11, 2009
Jean Wojtowicz Testifies Before House Small Business Committee
NADCO Chair, Jean Wojtowicz addressed the House Small Business Committee on June 10 and stressed that Congress should help small businesses recover from the recession, not hurt them by raising fees charged to borrowers of one of the country’s most popular business financing programs.
Jean told committee members that raising fees by 38.9 basis points, as proposed in the 2010 federal budget legislation, would negate the positive effects of fee reductions put in force by the SBA earlier this spring. She asked Congress to open up new sources of funding for small and high-tech companies with the greatest potential for creating new jobs.
Potential sources of new funds include: raising the amounts banks and certified development companies could lend to businesses beyond the current maximum of $1.5 million, allowing borrowers to use both the 504 and 7(a) loans for the same project, permitting borrowers with higher net worth to participate in 504 projects and allowing borrowers to tap into their personal lines of equity credit for their businesses.
She also said Congress should give local CDCs the freedom to perform recoveries and seek settlements from loan guarantors of 504 projects, rather than wait on the slower SBA process. She also said the SBA should not “shy away” from working with the lending programs of other federal credit-granting agencies such as the departments of Agriculture, Treasury and Housing and Urban Development.
“Cooperation would unleash the full power of the federal government to help restart the engine of small business productivity that creates 70 percent of all new jobs,” said Wojtowicz.
“Working together, we must be more creative and flexible in serving the needs of new industries. We must tear down the walls of arcane, irrelevant and restrictive regulations or policies that create unnecessary barriers to reaching the industries of the 21st Century economy.”
Jean went on to say, “The Congress and the Obama administration have worked hard to put more fixed assets and working capital in the hands of small businesses hard pressed by this recession. The stimulus legislation is beginning to favorably impact capital access and job creation. Our industry believes more should be done, and quickly, to help small businesses.”
Loan helps day care expand
By DAN WALLACH
March, 23, 2009
Carla Aran wanted to expand The Learning Center day care in Lumberton that she acquired on Jan. 1.
Like any business owner, all she needed was capital.
Not too long ago, a borrower took a business plan to a lender and walked out with the cash.
The major bailouts turned that spigot off for everyone.
Luckily for Aran, she had SBAlliance Capital, which is a source for a Small Business Administration loan at interest rates sometimes lower than commercial rates.
She also had enough money to invest on her own, and a lender who is confident in her project.
Also last week, fees on origination of loans for the commercial lender were waived - thanks to the federal stimulus.
Loan fees are what banks charge customers to arrange the loan.
That means, for example, on a loan of $500,000, a borrower could save .015 percent, which works out to $7,500, said Jessica Hill, business development manager for SBAlliance Capital, which is operated by the Greater Beaumont Chamber of Commerce.
"There are still a lot of borrowers and small businesses that want to expand," she said. "On the lending side, they're not as forthcoming as they have been in the past."
SBAlliance has 24 loans on its books, not counting the ones that have been paid off, Hill said.
"We're waiting to close on three other loans," Hill said. She said prospective borrowers include a law firm, a hotel, and a printing company.
Hill wouldn't identify the businesses until they secure financing from the Small Business Administration.
Commercial Realtor Charlie Foxworth, chairman of SBAlliance Capital's board, said money is available for borrowers whose credit is good and whose businesses are sound and have good cash flow.
"I think there's money to lend, but the standards have gone higher," he said. "People who have long-standing relationships with banks are having to be re-checked."
Aran, 42, was able to qualify for 35 percent of what she needed at SBAlliance. She provided 15 percent and she qualified for a commercial loan at CommunityBank of Texas for the balance, or 50 percent in her case.
Pat Parsons, chairman and chief executive of CommunityBank of Texas, said lenders are more cautious, but good projects can land financing.
"There should not be a problem getting a loan for a good project that makes sense," he said.
In Lumberton, day care makes sense because the Hardin County city is among the fastest-growing in Texas, said City Manager Steve Clark. The population exceeds 13,000 now, up from 8,700 in the 2000 census.
Aran said she plans to erect a new building that will enclose about 5,500 square feet, connect to the existing building with a breezeway, and remodel the existing building at 124 Country Lane Road, Lumberton, with a new kitchen, an expanded cafeteria, a gym, and a computer classroom.
The expansion will allow Aran to accommodate between 150 and 200 children when the project is completed in about six months. Construction will begin in about two weeks, she said.
Aran said she thinks there is plenty of demand in Lumberton, which is why she wanted to acquire the business and why she sought the loan through SBAlliance.
She said applying for the SBA loan was a "learning experience" that made applying for the commercial loan seem simple in comparison.
"SBA was very detailed," she said. "I had no problems with the commercial loan."
Release Date: February 18, 2009
Contact: Mike Stamler (202) 205-6919
Release Number: 09-10
Internet Address: http://www.sba.gov/news
SBA Applauds Stimulus Bill, Planning Underway For Broadest, Quickest Small Business Impact
WASHINGTON – The American Recovery and Reinvestment Act contains a package of loan fee reductions, higher guarantees, new SBA programs, secondary market incentives, and enhancements to current SBA programs that will help unlock credit markets and begin economic recovery for the nation’s small business sector.
“The tax incentives and credit stimulus elements of the Recovery Act will truly help small business owners affected by the credit crunch, and will provide financing opportunities to help them create new jobs in their communities,” said Acting SBA Administrator Darryl K. Hairston.
“There’s a lot to digest in the legislation, and SBA has established teams to tackle a wide variety of policy decisions, system modifications, regulatory changes, legal requirements, and new program launches authorized by the President and Congress,” said Hairston.
The bill provides $730 million to SBA and makes changes to the agency’s lending and investment programs so that they can reach more small businesses that need help. The funding includes:
• $375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares, up to 90 percent for certain loans
• $255 million for a new loan program to help small businesses meet existing debt payments
• $30 million for expanding SBA’s Microloan program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to microlenders
• $20 million for technology systems to streamline SBA’s lending and oversight processes
• $15 million for expanding SBA’s Surety Bond Guarantee program
• $25 million for staffing up to meet demands for new programs
• $10 million for the Office of Inspector General
The bill also authorizes refinancing for certain SBA loans so borrowers can expand their businesses on favorable terms, and expands leverage capability for Small Business Investment Companies.
“We are going to be part of the solution, and this bill gives us specific tools to make it easier and less expensive for small businesses to get loans, give lenders new incentives to make more loans, and help restore healthy SBA secondary markets to boost liquidity,” Hairston said, noting also that more details on implementation will be coming over the next few weeks.
The stimulus bill takes a comprehensive approach and attacks several problems facing small businesses at once by reducing fees, guaranteeing a greater share of certain loans, expanding capacity in the Microloan program, providing new loans to help small businesses keep their doors open through economic hardship, as well as new mechanisms to help unfreeze the secondary markets for SBA-backed loans.
Declines in SBA lending volume last year, which are continuing in FY 2009, reflect problems in the broader credit markets, and present hurdles to small businesses that are seeking credit in the current economy. The financial crisis has created a variety of conditions that impact small businesses, including a lack of liquidity in the banking system, a reluctance of many lenders to extend new loans, tightened credit standards, weaker finances at small businesses, and uncertainty about taking on new debt on the part of many entrepreneurs.
The Recovery Act addresses small businesses’ lending problems, and addresses key investment and contracting issues. The bill helps Small Business Investment Companies better leverage investment capital to reach more small companies. The bill also increases the current contract limit for SBA’s Surety Bond Guarantee program, which will help small businesses compete for contracts.
90 Percent Guarantee
The bill allows SBA to raise its loan guarantee from the current levels to as much as 90 percent for some loans. At present, SBA can guarantee loans up to 85 percent on loans up to $150,000, and up to 75 percent on loans greater than $150,000. The 50 percent guarantee on SBA Express loans would remain unchanged. Increasing the SBA guarantee percentage will encourage lenders to extend more capital to small businesses by increasing the share covered by an SBA guarantee.
Business Stabilization Loans
The bill creates a new SBA loan program to provide deferred-payment loans of up to $35,000 to viable small businesses that need the money to make payments on an existing, qualifying loan for up to six months. These loans will be 100 percent guaranteed by SBA. Repayment would not have to begin until 12 months after the loan is fully disbursed. The bill provides $255 million for this new program. These loans will help ensure that small businesses have time to re-focus their business plans in order to succeed in the long run.
Microloans
The bill expands SBA’s Microloan program, which provides small loans (up to $35,000) paired with technical assistance to start-up, newly established or growing small businesses. The bill provides funding to increase loans from SBA to participating Microlenders by $50 million through September 30, 2010, and adds $24 million in grants to provide technical assistance to borrowers. Historically, these loans reach low-income individuals, women and minorities in both rural and urban areas. Expanding this program through the stimulus bill will help ensure these entrepreneurs are not left behind in the credit crunch.
Refinancing
The bill also gives SBA the power to use the 504 Certified Development Company program to refinance existing loans for fixed assets, providing fresh support for small business expansion. This change will help business owners expand their current development projects and create jobs in their communities.
Secondary Market Expansion
The bill authorizes SBA to establish a secondary market for pools of “first lien” loans under the 504 program. These “first lien” loans from commercial lenders currently have no SBA guarantee. The bill authorizes SBA to deploy federal guarantees for pools of these first lien loans, so that they can be sold to investors in a secondary market. Providing liquidity for these first mortgages will help encourage lenders to continue participating in SBA’s 504 loan program, which provides a key source of capital for community development and other projects.
The bill also empowers SBA to set up a Secondary Market Lending Authority that would make direct loans to broker-dealers that participate in the secondary market for SBA-guaranteed 7(a) loans. These broker-dealers would use the funds to purchase SBA-backed loans from commercial lenders, assemble them into pools and sell them to investors in the secondary loan market. This program may help address some of the issues facing the secondary market for SBA loans and may ultimately help SBA lenders make new loans to borrowers.
Investment Program
The bill helps SBA-licensed Small Business Investment Companies (SBICs) and families of SBIC funds better leverage the capital they use to invest in small businesses. The bill sets maximum levels of funding the agency can provide to these companies at up to three times the private capital raised by those companies, or $150 million, whichever is less. It also raises the percentage any one SBIC can invest in a single small business to 10 percent of total capital, and raises from 20 percent to 25 percent the percentage of any licensee’s dollar investments that must be made in “smaller” businesses.
Surety Bonds
The bill also raises the maximum contract amount that can be covered by an SBA guaranteed surety bond from $2 million to $5 million, and, under certain circumstances, for contracts amounting to $10 million, and provides additional funds to cover the costs of expanding this program. Small businesses need surety bonds in order to bid on and obtain many federal and other contracts. SBA guarantees surety bonds to small businesses that private surety companies would not otherwise be able to extend.
FEMA deadline extended until Jan. 10
December, 11, 2008
The deadline for homeowners, renters and business owners who suffered damages from Hurricane Ike to register for state and federal disaster assistance has been extended to Jan. 10.
The deadline for homeowners, renters and business owners who suffered damages from Hurricane Ike to register for state and federal disaster assistance has been extended to Jan. 10.
The extension was granted at the request of the State of Texas and Gov. Rick Perry.
Possible assistance could include grants to help pay for temporary housing needs, essential home repails and other serious disaster-related expenses not covered by insurance or other sources.
Low-interest disaster loans from the U.S. Small Business Administration are also available for homeowners, renters, businesses of all sizes and private nonprofit organizations to repair or replace real or personal property.
Texans who had damage or uninsured losses and have not yet registered can do so online or over the phone.
The numbers are 1 (800) 621-3362 and 1 (800) 426-7585 for the speech- and hearing-impaired. Both numbers are available 24 hours, seven days a week.
FEMA's Web site is www.fema.org.
November 25, 2008
National Association of Development Companies (NADCO) reports SBA 504 loans encouraging business expansion remain available for America's small business entrepreneurs.
McLean, VA (PRWEB) November 25, 2008 -- One needs to look long and hard for even the smallest success in today's dramatic economic downturn. While virtually every analyst and pundit is wallowing in an economic forecast of doom and gloom, it may come as a big surprise, but the SBA 504 loan program is still helping small businesses nationwide to expand (see NADCO's 2008 Economic Impact Study). No $700 billion bailout, no Wall Street fallout, just Main Street small businesses that are turning SBA 504 loans into increased profits while adding employees and bolstering their local economy's tax base.
When the economy is strong and access to capital is relatively easy, there is typically less demand for SBA financing. In the case of the SBA 504 loan, a private sector lender partners with a Certified Development Company (CDC) to provide financing for the purchase, construction or renovation of owner-occupied commercial real estate. Use of the SBA 504 loan tends to become increasingly important as a source of long term financing when traditional sources of money decline as they have in recent months.
In spite of the credit crisis that has crippled many financial institutions and slowed lending for commercial expansion, CDC's are supporting entrepreneurs in virtually every U.S. market with SBA 504 loans for qualified small businesses. "The credit crisis has not frozen the SBA 504 loan program. Loans are still available for businesses seeking to grow through real estate acquisition, expansion of existing facilities, or purchase of new equipment," says Christopher Crawford, NADCO President. "CDCs, our banking partners and the SBA are doing business as usual and will continue to do so for the long haul."
SBA 504 loans provide a steady source of new long-term capital at a fixed rate, and frequently with only 10% down on a new project for a small business. These loans are the perfect tool for conserving cash for operating expenses. A vacant commercial property in a neighborhood can represent an opportunity for a small business owner who needs more space. Now may be the perfect time to consider expanding into a larger facility, or simply seizing the chance to buy a first building at an advantageous price.
The program offers, "no risk loans, SBA guarantees and no federal expenditures." The CDC industry reports that virtually all lending partners using the 504 program are still actively lending on SBA projects to qualified expanding small business borrowers. The SBA 504 loan program remains the ideal program for banks, as it mitigates private sector lender risk on commercial real estate financing through the use of an SBA guarantee.
Funds for the SBA 504 loan program come from the sale of long term bonds each month. These bonds carry the full faith and backing of the U.S. government and present an attractive investment option for money managers, pension funds, insurance companies and other large institutional investors. The sales of SBA 504 bonds, known as debentures, have been successfully conducted every month for the past 27 years. Crawford concludes, "The amazing part about 504 is that it costs the federal government absolutely nothing, due to the low default rate costs that are covered by its low fees. Likewise, there is no requirement for a Congressional appropriation of funds for 504."
CDCs are located in every state, as well as in Puerto Rico. A local CDC may be found through www.nadco.org, or by contacting any local commercial bank that participates in SBA lending.
About the National Association of Development Companies:
Created in 1981, the National Association of Development Companies is the trade association for America's Certified Development Companies (CDCs). Certified by the U. S. Small Business Administration, CDCs are community-based economic development organizations that serve their local communities and states, and are dedicated to the promotion of small business expansion and job creation through SBA's 504 Loan Program. In addition to the 504 program, many CDCs also provide small businesses with access to other Federal, state, and local economic development loan programs.
Based in the suburbs of Washington, D.C., NADCO provides legislative and regulatory support for the 504 Loan Program on behalf of CDCs, the program's lending partners (including first mortgage lenders, attorneys and others allied to the industry), and 504 small business borrowers. For more information, please call (703) 748-2575 or visit http://www.nadco.org.
Editor's Note: Local success stories of entrepreneurs using SBA 504 loans available upon request.
November 25, 2008
|
|
|