Analysts say the fee elimination means more capital will be available to businesses at lower costs, while increasing guarantee levels will help provide banks with the greater confidence they need to extend credit during the economic crisis.
Before the recovery act, a typical 7(a) loan of $300,000 carried a guarantee fee of between 2 and 3 percent. That same loan today, with the new 90 percent guarantee and the temporary fee elimination, would save a borrower about $8,100. In total, the new provisions are expected to support approximately $8.7 billion worth of 7(a) loans.
Finding Financial Support
Generally, SBA-backed loans provide a key source of financing for viable small businesses that have real potential but cannot qualify for loans from traditional sources. The loans are provided and funded by participating banks and other lenders.
To borrow, a business must be established for profit and must also meet SBA's size standards for a small business, among other requirements. To qualify for an SBA 7(a) guarantee, a small business must also meet the lender's criteria and the 7(a) program requirements. In addition, the lender must certify that it could not provide a loan under the proposed terms and conditions without the 7(a) guarantee.
Help Where It's Needed
Many of the loans that SBA backs go to underserved markets. In fact, the administration's loans are more likely to go to a business that might be minority owned, woman owned or located in an area with lower income and higher unemployment than conventional bank loans.
June Gold is one of the many female business owners who qualified for financing under the new provisions. The president of a software and program development firm, she was originally turned down for a $500,000 loan by a bank after her husband and company founder, Steve, suddenly died. The funding was denied despite contracts between Gold's firms and two large pharmaceutical companies, leaving her in need of money to hire skilled staff and continue marketing her products.
Her luck changed when she chanced upon a workshop that directed her to a bank in the area that handles SBA loans.
"They found a way to make it happen," says Gold. With her $400,000 7(a) loan, she hired a seasoned salesperson and is expanding operations. Last year, her company posted $1.2 million in sales.
To learn more, for a list of approved lenders or tips on starting a business, visit the Web site www.sba.gov.
A new lending program could make working capital more affordable for many small businesses.
]]>After years of collecting such data, the United States Small Business Administration has learned a lot about what makes some new business thrive while others collapse under the pressures that are so prevalent during the first months and years of operation. On Tuesdays in October, SBA officials will team up once again with the Suffolk Economic Development Department to share some of those lessons.
]]> The “Start and Grow Your Suffolk Business” seminar series begins Oct 6 and will be held from 6 p.m. to 8 p.m. each Tuesday of the month, with a focus on different topics each week.This is the fourth or fifth such series in Suffolk, according to Kevin Hughes, the city’s economic development manager, who said some topics change from one series to another.
But some of those topics — like Business Plan Development (Oct. 13) — stay pretty constant because of their value to business owners.
“Obviously, there are some that are very important for every business,” he explained.
Hughes’ department and the SBA consider a solid business plan to be foundational to the success of a new or growing business. In fact, it’s almost impossible to get a loan for a new business without one.
Even so, Hughes said, “You see a lot of startups … who haven’t even done a business plan.”
The two-hour seminar Oct. 13 will cover some of the techniques for writing a winning business plan. It will be led by Jim Carroll of the Small Business Development Center, which specializes in helping small businesses get off the ground.
“It’s a great resource for small businesses, really, at any stage,” Hughes said of the SBDC.
The information that Carroll and other presenters will provide participants is a benefit of the series, Hughes said, but the access to resources like the SBDC is even better.
“Knowing that an organization of people is out there — a lot of them free — that can assist” small business owners can make a huge difference, he said. “The best thing is that we’re able to get those resources in front of people.”
Past seminars have attracted 15 to 25 participants at a time, Hughes said, and they range from the merely curious to the already-established small business owner looking to broaden his awareness of the help that’s available.
“They range from the dreamer to folks who are already up and running,” he said.
Those who would like to participate in the programs are encouraged to call in advance so that organizers can ensure they have enough materials. But Hughes said even walk-ins will be welcome.
The following seminar topics are planned:
4Oct. 6: Do you know how to read and respond to an opportunity with the federal government? This presentation will provide a section-by-section understanding as to what the government asks for in a solicitation. Insights on how to prepare a response to the proposal will be shared.
4Oct. 13: Business Plan Development. Learn about some of the techniques to writing a winning business plan.
4Oct. 20: Pricing to win federal contracts. A follow-up to the first session, focusing on the financial requirements that come along with the pursuit of federal contracts, from the preparation of a cost submission to having the necessary financial resources to invoicing requirements.
4Oct. 27: Finance. Hear what the bank is looking for and the things that impact your loan package. There will be an overview of the Small Business Administration Loan Guaranty Program.
]]>"Business Loans- No Hype, Just the Facts" will be presented by Wilson and will feature Ostie Mathisen, vice president of First State Bank located in Barboursville.
The presentation will include an open question and answer session.
This clinic is one in a series of free small business clinics. Future clinics and dates are as follows:
"Business Loans- No Hype, Just the Facts" November 5;
"Business Legal Organization and Tax Rates" October 15;
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Como Ahorrar Dinero en Gasolina - Elegir el aceite correcto para el motor de su vehículo.
Ahorrar Dinero Servicios Publicos - Muchas compañías que suministran energía le enviarán, sin ningún costo, una lista de trucos para aprovechar la energía
Ahorrar Dinero Telefonos Seguros - Merece la pena dedicar unos pocos minutos para determinar si puede reducir las aportaciones mensuales y seguir recibiendo la cobertura que usted y su familia necesitan.
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