WASHINGTON - President Obama and Treasury Secretary Timothy Geithner said the United States will free up credit for small businesses by raising loan guarantees and spending $15 billion to bolster the secondary market.
With small business owners who will receive tax breaks and better access to credit in the audience, the President explained to. Business Grants The U.S. Government offers grants to many businesses because they are essential to stimulating the economy. As a small business, you provide much needed jobs and help the economy significantly. The major businesses we see today like. The president proposed a $30 billion small business lending program, the latest in a series of administration efforts to jump-start hiring by the nation's small businesses. NASHUA, NH—President Barack Obama rolled out a $30 billion small business lending.
The President is proposing that Congress pass two temporary expansions of critical Small Business Administration (SBA) lending programs. These are both legislative proposals designed to help small businesses through what continues to be a difficult period in credit markets. Obama's small business plans: Where they stand By Catherine Clifford, staff reporter February 8, 2010: 10:46 AM ET. In response, banks have shied away from small business loans. The SBA's programs reduce some of that risk by guaranteeing a portion of.
President Obama Announces New Small Business Lending Initiatives. Conference Call at 1. Discuss Plan WASHINGTON, DC- President Barack Obama will visit a small business in Maryland this afternoon where he will announce new lending initiatives to shore up lending for America’s small businesses. The Obama Administration is committed to using all of our available tools to help small businesses access capital, create jobs and support a durable economic recovery. The Administration has already taken several important steps to get credit flowing again to small businesses and to encourage job growth and these efforts have helped produce results. Compared to the depths of the recession, average weekly SBA loan volume is up over 7.
SBA secondary markets have returned closer to historical levels. In total SBA funding has supported nearly $1. ARRA was enacted on February 1.
But there is still a long way to go. That is why the President is announcing new measures today as part of an ongoing effort to help small businesses access credit and create jobs.“Small Businesses have always formed the backbone of the American economy. And that’s why today, we’re announcing new steps to support more lending to America’s small businesses—steps that will lead to more jobs, more growth, and a stronger economic recovery.”“America will not recover until our small businesses recover. In communities across the country, they are the engines of job growth and lead the way to the industries of the future. While we have made progress stabilizing the financial system, we need to do more to help small businesses get the credit they need to grow and hire. The President’s announcement today has a simple goal: help small businesses by helping the community banks whose business it is to serve them.
The Administration will take steps to improve access to credit for small businesses by supporting lending by small banks and Community Development Financial Institutions (CDFIs) through the Financial Stability Plan. This new initiative will support small business lending by providing lower- cost capital to small banks that present small business lending plans and to CDFIs that lend to small businesses in the hardest- hit rural and urban areas. To get small businesses more access to the credit they need to grow and thrive, the Administration will seek legislation to increase the maximum size of three types of Small Business Administration loans. The President will call on Treasury Secretary Geithner and SBA Administrator Karen Mills to convene a conference of regulators, Congressional leaders, and small- business owners to establish further steps the government can take to help small businesses access the credit that is so vital to their growth, and to economic prosperity in this country.##.
Small Business Administration Loan Programs for Small Businesses. The Small Business Administration (SBA) exists for the benefit of helping small businesses in a number of capacities. For one, it serves as a guarantor of loans for small business. In other words, small businesses apply for loans through financial institutions and the SBA guarantees those loans in order to make approval more likely. The American Recovery and Reinvestment Act, passed in 2. President Barack Obama's Administration, was developed to help banks affected in the financial meltdown on Wall Street in 2. That program is now over.
The Basic 7(a) Loan Guaranty Program. The 7(a) loan guaranty program is very valuable for small businesses because it is available for not only existing businesses but also for startup businesses. It is often difficult for startup firms to get a loan, but the SBA guarantee program makes it easier.
The loans are guaranteed by the SBA but delivered through commercial lending institutions. This is the SBA's primary loan guaranty program as it is for businesses that might not be eligible for loans through normal channels. It is flexible in that it is available for a number of different business purposes. Loan maturities are up to 1. The lenders of 7(a) loans are usually commercial banks called participants.
Some non- banks are also participants in the program. The loan guaranty does not cover 1. Under the new ARRA Act, the guaranty is 9.
The guarantee means that if the borrower defaults, the government will cover the loss for the lender. The commercial bank structures the loan according to their own requirements and the small business has to make application to that bank using their own application forms and processes. There are also SBA forms and applications to complete. The borrower should develop a positive relationship with the bank and carefully fill out the loan application and any other paperwork required. The borrower may be required to give a presentation to the bank.
It's important for the borrower to know how to prepare and apply for a bank loan. It is also important for the borrower to know their creditworthiness. Interest rates on SBA loans are negotiated between the borrower and lender but must not exceed SBA maximums which are pegged to the prime rate. Check the SBA website and with the bank to which you have applied for the going interest rates. One of the provisions of the ARRA is to temporarily eliminate loan fees from the SBA guaranteed loans. The SBA offers a variety of versions of the 7(a) loan program to serve the various needs of small businesses.
The 5. 04 Loan Program - Certified Development Companies (CDC)SBA 5. They are long- term, fixed rate loans for equipment and real estate.
These loans are targeted toward small businesses that need . The maximum 5. 04 loan is $1,5. A business must create or retain one job for every $5. SBA. Businesses that fall in the .
The maximum 5. 04 loan goes up to $2 million when the business can meet a public policy goal. Public policy goals are listed on the SBA 5. SBA 5. 04 loans are associated with Certified Development Companies (CDC). There are about 2. CDCs in the United States. They are nonprofit companies set up to contribute to the economic development of communities.
CDCs work with private lenders and the SBA to provide loans for small businesses. A 5. 04 loan is usually made by a private lender who supplies 5. CDC supplying an additional 4. The small business is usually responsible for putting up the remaining 1. The SBA has started a loan program for veterans, active duty service members who are eligible for the military's Transition Assistance Program, disabled service veterans, reservists and National Guard members, spouses of service members, and widows of service members. The purpose of this program is for eligible people who want to either start or expand a small business.
There is a network of SBA participating lenders nationwide. The loans can be used for most purposes including everything from working capital to real estate purchases.
The interest rates for these loans are among the lowest the SBA offers at 2. The loans can be up to $5. From $1. 50,0. 00 to $5. SBA will guarantee 7. More about the Patriot Express Loan Program. The SBA Micro- Loan Program. The SBA Micro- Loan Program offers small loans to startup businesses or very small, new businesses.
Loans are made at the local level through intermediaries which are non- profit lenders in the local community. The maximum loan is $3. Loans are for a variety of purposes including working capital needs, but they can't be used to pay off debt or buy real estate.
The intermediaries who make the loans are required to offer training and assistance to the small businesses who apply for the micro- loans. Small businesses may even be required to participate in training before loans are granted. Loans are made for a maximum term of six years, but the term of the loan may vary based on the purpose of the loan. Interest rates vary depending on market conditions but the SBA states the interest rates are usually between 8% - 1. These loans usually require collateral as well as a personal guarantee by the business owner.
SBA Special Purpose Loans. The SBA offers a variety of special purpose loans that are often overlooked by small business owners. For example, there are loan programs to aid businesses that export products to other countries. The first is the SBA Export Working Capital Program.
This program targets businesses that can generate export sales but need additional working capital to support those sales. The program will guarantee 9. Small businesses face unique challenges when they engage in the export and import business. The SBA aims to help small businesses with these challenges. Their SBA Export Express program streamlines the loan process for exporters and lenders. The SBA provides loans to Employee Stock Ownership Plans (ESOPs) which is part of a plan sponsored by the company and qualified under Internal Revenue Service, Department of Treasury, or Department of Labor regulations.
These are called Employee Trust Loans. If your business wants to plan, design, or install a pollution control facility, you may be able to qualify for a SBA 7a Pollution Control Loan. The program is to purchase fixed assets to control pollution only. The SBA has an umbrella program to provide working capital to small businesses called the CAPlines program. The program covers working capital needs for builders and contractors and other small business owners. The Small Business Administration provides something for just about every type of small business and every need you have as a small business owner. The paperwork may seem daunting, but once you get through it, it is worth it.
Go through the SBA site and see what you can find.