March 2008 Mortgage Licensing Update
There has been a lot of excitement in the wake of President Obama taking office, including the very first major enactment of his career, namely the American Recovery and Reinvestment Act of 2009. Before it was put into law, for good reason, there was much discussion of the dire need to help our small businesses that, under any economist’s objective point of view, needed help in this troubled economy. And because it addressed small businesses, there was talk that it had created a new Stimulus Loan Program so small businesses could receive needed capital. But before we get too excited, let’s examine if there really is such a new creature under the Act.
I have good news and bad news. tech99 The bad news is the Act does not create a new Stimulus Loan program. The good news, as I will discuss in a moment, is that there are SBA loan programs that fit the same bill. An examination of all 1,200 pages of the Act demonstrates that not a single dime is allocated directly to small businesses, or for loans/lines of credit. Quite frankly, except for disaster relief (SBA’s FEMA loan program), the Federal government has never been in the business of giving away or loaning monies directly to businesses. Instead, the Act took the existing SBA loan programs and simply made them “new and improved”. In previous articles, I describe how section 501 eliminated the SBA guarantee fee which was collected from the borrower on closing and sent to Washington to help defray bank losses if there was a default. And, section 502 increased the guaranteed percentage for such losses up to 90% on all SBA loan products except SBA Express (which candidly is not being used very often nowadays). techfind So it is more like “Same programs, better terms”.
So what does that mean to small businesses? As a bottom line, does the Act help us in any way? If you’re looking at some new drastically different loan program that will save the day, you will be disappointed. But if you’re looking at improved programs which hopefully give more incentives to banks making loans, you’re more in luck. For example, the popular SBA Community Express Loan Program is now stronger than ever with gives you more of a chance to receive one of the loans. Here are some of the beneficial terms:
o Loans from 5K to 50K.
o Unsecured. There are no liens on your property or residence.
o Simple paperwork without any tax returns, businessearch business plans, or financials.
o Because of simplified procedures, you can usually receive an answer in 48 HRS and funding within two weeks.
o Start-ups are OK, although they usually receive smaller loans.
o The interest rate is at a seven year low, which combined with regulation by the SBA, is at 7.75%, or a principal and interest payment of $60 per month for every $5,000 borrowed.
Sound too good to be true? Well pinch yourself again because they are happening day in and day out. It is part of a pilot program which began in 1995 which was meant to be simple for small businesses to apply for and receive such loans. And the good news is that banks are actually making them. Although they may not technically be called Stimulus Loans, in practical effect they are synonymous. After all, who cares what we call them as long as they can deliver needed capital to our small businesses? Sue Malone is a small business advocate and founder of Strategies For Small Business, incrediblethoughts a company devoted to providing SBA Loans for small business owners, which loans are currently available, whether as start-ups or for the expansion needs of existing businesses. For six years she has been the nations #1 provider of SBA Community Express Loans, having funded over 25,000 businesses in all 50 states. For a free loan consultation or for more information on the programs, visit our website at
As we continue to sift dutifully through the over 1,000 pages of the stimulus bill (American Recovery and Reinvestment Act of 2009), there is one provision that is not getting much attention, but could be very helpful to small businesses. If you are a small business and have received an SBA loan from your local banker, health and wellness blog but are having trouble making payments, you can get a “stabilization loan”. That’s right; finally some bailout money goes into the hands of the small business owner, instead of going down the proverbial deep hole of the stock market or large banks. But don’t get too excited. It is limited to very specific instances and is not available for vast majority of business owners.
There are some news articles that boldly claim the SBA will now provide relief if you have an existing business loan and are having trouble making the payments. This is not a true statement and needs to be clarified. As seen in more detail in this article, this is wrong because it applies to troubled loans made in the future, not existing ones.
Here is how it works. Assume you were one of the lucky few that find a bank to make a SBA loan. You proceed on your merry way but run into tough economic times and find it hard to repay. Remember these are not conventional loans but loans from an SBA licensed lender that are guaranteed for default by the U.S. government through the SBA (depending upon the loan, between 50% and 90%). Under the new stimulus bill, the SBA might come to your rescue. You will be able to get a new loan which will pay-off the existing balance on extremely favorable terms, buying more time to revitalize your business and get back in the saddle. Sound too good to be true? Well, you be the judge. Here are some of the features:
1. Does not apply to SBA loans taken out before the stimulus bill. As to non-SBA loans, they can be before or after the bill’s enactment.