Unsecured Small Business Loans – Good News – Stimulus Bill Allows SBA 90 Percent Guarantee For Loans – Business Loans

Anyone remotely involved with small businesses, whether as a consultant, lender, supplier, leasing specialist, trade association, or simply as a consumer who is tired of driving by sections of town and wondering why your favorite business unceremoniously threw in the towel, would very much like to hear some good news. Not to mention the small business owner itself. After all, there are 27 million small businesses that deserve to be thriving in this nation, but too often were ignored by the Bush administration. Classically non-complainers by nature, they just want a scrap of hope thrown their way. And I’m not talking about wide-eyed idealists looking for handouts-in all due respect to Emily Dickinson, they’re not looking for the”thing with feathers that perches in the soul”. Just give us a few bucks and we will run with it. This is a continuing article (20 in all) on the subject: Help. Is anyone out there loaning to small businesses anymore?Fortunately there is a loan program out there and SBA lenders are actually making loans currently: the Community Express Loan Program. This gives unsecured small business loans between $5,000 and $50,000 with very little paperwork, answers typically in two days, interest rates presently at 7.75%, funding and two weeks, and monies wired directly to your business account. There are still lenders participating in this program, although Congress has failed to make the program permanent and still has a 10% cap on the number of loans.Enter the Obama stimulus bill. Let us look how it affects this program and small business lending as a whole.If you have tried to wade through the 1,100 or so pages of the new stimulus bill (American Recovery and Reinvestment Act of 2009), you know its like chipping through granite. But let me pull out a little gem. It now allows the U.S. Small Business Administration (SBA to you) to guarantee up to 90% of loans made by private lenders under their program. Let me explain. This is great for Community Express.When the Small Business Act was enacted in 1958, it had a very simple mission. Find a way to get loans to small businesses that couldn’t get them through traditional channels. It did this in an ingenious way. They knew banks where reluctant to loan to small businesses, especially startups, because of fear of failure. So the SBA collected a fee on each loan and used this as a fund to pay banks if there was a default. Bingo, there was invented the SBA guarantee fee. It doesn’t take a degree in rocket science from MIT and an MBA from Harvard to know this gives incentives to the banks to make more loans.SBA loan programs have guarantees from 50% to 85%. Specifically, the SBA currently has an 85% guarantee on loans up to $150,000 and up to 75% on loans above $150,000. On the other hand, there are some programs that only go as high as 50%, including the Express Loan program (for those types of loans the new guarantee will not change). With the new stimulus bill, the SBA has the right to increase these fees to 90%.Think about this for a moment. Simple math tells us more guarantee, the greater the likelihood of the bank making the loan. For goodness sakes, 90% is tapping on the door of a 100% guarantee! Also note the guaranteed portion is typically sold on the secondary market (which has recently shut down to almost nothing) so there is more chance for loans to be sold and more money to go back into the coffers of the banks for further lending.Notice I said the SBA has the right to increase it to 90%. It can pick which program. And it has not occurred yet. But if I was a betting person, I would say they would be seriously looking at most of the programs because everyone is scraping for ideas to revive the economy.For those addicted to primary source documents, this is what the new statute, in relevant part (my attorney wanted me to add that) says:SEC. 502. ECONOMIC STIMULUS LENDING PROGRAM FOR SMALL BUSINESSES. (a) PURPOSE- The purpose of this section is to permit the Small Business Administration to guarantee up to 90 percent of qualifying small business loans made by eligible lenders.
(b) DEFINITIONS- For purposes of this section:
(1) The term ‘Administrator’ means the Administrator of the Small Business Administration.
(2) The term ‘qualifying small business loan’ means any loan to a small business concern pursuant to section 7(a) of the Small Business Act (15 U.S.C. 636) or title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 and following) except for such loans made under section 7(a)(31).There is also a sunset provision under Subparagraph (f) that the guarantees are only good for one year after enactment of the bill, unless extended by Congress.So what does it do for me now as a small business owner? Well now the not so good news. I predict the SBA will be increasing many of its programs to 90%. But to get the banks in the lending mood again, there has to be a secondary market. There is also new legislation on that, which we will discuss in another article. But once we have a secondary market, I predict that they banks will not only loan, but do so in a big way. For three reasons:First, history tells us when there is economic inactivity due primarily to depressed conditions, when the cycle changes for the better, like a sling shot affect, it changes dramatically. Remember when people were unable to refinance or purchase their homes because of tight markets and high interest rates? The rates went down and many jumped at the chance to refinance, improve their homes, and purchase (some say too precipitously) with abundance. Although this is an overstatement and also depends upon other factors such as employment, standards of living, etc., the analogy holds that when things loosen up, there will be a substantial number of business loans.Secondly, banks are in large part in the business of making loans and they have not been doing so for some time. They will be anxious to make profits again.Lastly, simple economics tells us when there is a vacuum in the market; capital will rush in and take advantage of that open market and initial lack of competition. Large banks are not making business loans so small community banks are starting to rush in to take over the arena. Give them a secondary market and they will explode.So for the small business owner, I think this news of 90 % guarantees is favorable. Why did it take them so long?

Applying For a Small Business Loan and a Government Business Loan – Business Loans

Applying for a small business loan refers to the process by which a business owner requests funding from a lending institution. The process is usually not very easy and many documents are required for a lender to consider loan requests.The most common documents a lender will require of small business loan applicants are the loan application, personal and business tax returns, a personal financial statement from each owner of the business, certified financial statements of the business, documentation of the business’s structure, a list of all outstanding debts, and a business plan. A business plan usually includes expected revenue and how the loaned money will be spent.Depending on the lending agency, applicants may be required to also submit a proposal on how they will repay the money, including payment amounts and the length of the loan repayment term. Other times the lender will already have a set plan regarding loan terms.Lenders also consider the available capital and collateral of a business when an owner applies for a small business loan. Lenders want to know how much the owner has invested in the business and what collateral can be used to secure the loan in case it is not repaid.The interest rates and payment plans differ according to which lender is chosen for a small business loan. Having good credit and a healthy financial history can help a business owner secure the best terms for a small business loan.Applying for a small business government loan usually means to go through the United States Small Business Administration (SBA) to obtain funds for a business. The most basic type of loan offered by the SBA is a 7(a) loan, which is provided by lenders such as banks. These lenders structure their loans according to the SBA’s requirements and receive a guaranty for a portion of the loan. These loans are available only by guaranty, and both the lenders and the SBA share the risk of loans not being repaid. 7(a) loans come directly from the lenders; therefore, they are technically not government loans.To apply for a small business government loan, business must meet all of the following eligibility requirements:* Be a for-profit business
* Meet size requirements for the business’s industry
* Lack internal sources for financing
* Demonstrate ability to repay loanCertain types of 7(a) and special purpose loans may call for additional eligibility requirements. Other important factors considered when applying for a small business government loan include effective management, character, owner’s equity, and collateral. An individual may also be asked to provide a “Statement of Personal History” to analyze the abilities of the individual.Other variables that a business owner should be aware of when applying for a 7(a) loan are the maximum loan amounts, interest rates, fees, guaranty percentage, maturity terms, and prepayment penalties.

Unsecured Business Loans – Ideal Option to Support Your Trade – Business Loans

The main purpose of every business is to earn utmost profit. Business person needs to put a lot of hard work to cause profit from business. The most vital thing needed is business is capital. Shortage of funds creates a lot of trouble and can be a hurdle in a way to improve you business.Unsecured business loans are particularly designed to meet the necessities of the people who desire to initiate their own business but are facing shortage of cash. With help of these loans one can avail the amount according to their necessity devoid of pledging security.Therefore the applicant can avail loan sum ranging from £1000 to £25000 which has to be repaid within a period of 1-10 years. The interest rate accused against this loan scheme is slightly higher, since the loan sum is permitted devoid of any security.These funds are beneficial for tenants and non homeowner as they do not own any property and therefore they will not find any obstacle in their way while availing these funds. Opposite to it these funds are also applicable to both good and bad credit holders, as there is no credit verification process involve.The candidate has to execute certain circumstances such as the applicant must be citizen of UK and as these funds are applicable for older people one must be above 18 years of age. The applicant must me be employed in reputed association and earn revenue least £1000 and must also have an active checking account.For quick authorization, online means is the best way as it is time saving way. This course is expedient and you can pertain from your home or office. Complete a single online form with few personal facts and submit it to the lender in 24 hours you will get the endorsement.

Small Business Loans For Women – SBA Proposes to Pre-Qualify Small Businesses For Loans – Business Loans

Are you ready for this? In a truly innovative move, Congress is proposing to let the Small Business Administration pre-qualify your small business for a loan. I’m not kidding. If this ever becomes a common occurrence, you can imagine how it will dramatically change the face of small business lending.We all know the drill. When applying for a home loan or credit card, for example, you can be pre-qualified. This means someone is checking your income, credit, business history, and the like to make a preliminary decision. If you’re pre-qualified, you are assured to get a loan when you finish filling out the mounds of paperwork. A similar process works with a small business loan.Under the SBA loan program, all loans are made (with the exception of FEMA disaster loans and the Microloan program) by private SBA licensed lenders. They made the decisions and do the pre-qualification. But there’s always doubt in the mind of a lender as to which borrower should be approved. Remember SBA lenders are audited frequently and their decisions, especially if there is a default, can be critiqued. So the SBA is going to step in and make the decision for the banks.This novel program is expressed in Section 111 of the Small Business Credit Expansion and Loan Markets Stabilization Act of 2009. There is budgeted a department of 250 Federal workers who will collect all the information and determine creditworthiness. If approved, you will be placed on a list which is made available first to lenders within 100 miles of your principal place of business. If no one bites off, it can then being disseminated to preferred lenders throughout the nation.But it’s even better. If no lender opts to make a loan, the SBA themselves will directly loan monies to you. It cannot be emphasized how substantial a change this is. The SBA simply does not make direct loans other than those in a disaster area.And, there is an SBA loan program in effect that is delivering the goods to small businesses. Believe it or not, there is a loan program out there and SBA lenders are actually making loans currently: the Community Express Loan Program. This gives unsecured small business loans between $5,000 and $50,000 with very little paperwork, answers typically in two days, interest rates presently at 7.75%, funding and two weeks, and monies wired directly to your business account. There are still lenders participating in this program.Hopefully this novel approach will catch on.