Small Business Financing Update
The Small Business Jobs Act of 2010 has recently become law. This is a very important step for small businesses and the economy. Here is a summary of key benefits for current and potential business owners regarding SBA and commercial lending:
(1) Raises the guarantee on the SBA 7A loan from 75% to 90%
This means that the government will guarantee 90% of the losses on an SBA 7A loan, capping the loss risk of banks at 10%. This should make loan approval much easier and allow people to get funding for franchise start ups that might otherwise be denied
(2) Raises the SBA loan limits on the 7A loan from $2 million to $5 Million and on the 504 loan from $1.5 Million to $5.5 million.
These days many banks do little lending outside the SBA program. Loans for debt consolidation and lines of credit outside the SBA 7A program lending are way down, so increasing the size of possible SBA loans will make more money available to all business owners, not just new owners. Total lending will increase and both the size and number of transactions will increase for both business loans involving real estate and ones “business only” loans.
(3) Permits refinancing on the 504 Loan Program
Until now only new purchases could utilize this program but moving forward existing business owners can use this program to pay off debt or consolidate it at lower interest rates, which now are in the low 5% range. This will make more cash available for other purposes and help businesses expand and re-tool.
(4) Waive SBA fees
These have been running at about 2% of the loan amount and they will be dropped at least until the end of 2010. The benefits of these savings speak for themselves.
Jack Kuykendall Franchise Consultant Office 909 980 0698 E-Mail: JackKuykendall@msn.com Website: www.FranchiseGuidepost.com
Related Links:
http://www.whitehouse.gov/blog/2010/09/27/president-obama-signs-small-business-jobs-act-learn-whats-it
http://economy.cbh.com/2010/10/small-business-jobs-act-of-2010-offers-tax-incentives-for-businesses-of-all-sizes-and-individuals/