The SBA has released the rules for a New lending program. The program was intended, by Congress, to help businesses who have buildings facing foreclosure. The limitations on the loans, however, are cutting out most companies that could benefit.
Rules declared for New SBA lending
Several companies have been waiting for the lending program rules from the Small business administration since January of this year. The rules have been something the SBA has worked on since 2010 when the program passed in Congress. On Thurs, February 24, the rules were officially announced. Underwater mortgages can be covered by the loans that companies with mortgages can get. These could be due in the next 24 months. About 10 percent of the loan amount is going to be something the business has to have in money or equity to be able to put down.
Small Business Administration program limitations
Help from the Small Business Administration lending program is meant to give businesses a helping hand. Really, this ought to stop foreclosures in the business. Business watchers, however, are concerned the limitations of the financing program could cut out so many companies that it will be practically ineffective. Any companies that don't have the down payment money accessible, that cannot pay the additional 1 percent fee or that already have short-term Small Business Administration mortgage loans are not allowed to get the loans. The purpose of the rules, according to the Small Business Administration, is to narrow down whom really needs help. The companies that are viable, however, about to shut down will get the first help.
Opening up small company loans
Getting small businesses the help they have to stay open is a tricky challenge, especially because payday loans are generally too small to help businesses. Whether or not the economy is doing well, companies might just fail. The chance of success in a business is the first thing to determine. Ensuring that the government does not loan $15 billion to businesses that can’t repay it is also tough. The Small Business Administration program is there to help companies that really need it. These are only the companies that will work though.
Information from
LA Times
articles.latimes.com/2011/feb/18/business/la-fi-sba-loans-20110218
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