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SBA's 7(a) Loans in Trouble
Link: http://www.ifgnetwork.com
The latest news for small businesses is that the Small Business Administration (SBA) no longer has enough economic stimulus funds to continue with the 90 percent guarantee on its flagship 7(a) loans.
This higher guarantee helped bring 1,200 lenders back to the SBA’s loan programs, and the lower fees made the loans more affordable for borrowers. SBA lending, which had slowed to a crawl rebounded BECAUSE of these breaks. The statistics show that through November 20, the number of 7(a) loans that were approved by the SBA this fiscal year, which began October 1, was up 80 percent over the same period a year earlier. The total dollar volume jumped 147 percent.
Now borrowers must decide: 1) to be put on a waiting list to get the higher guarantee and lower fees on their loans if additional money becomes available; or 2) apply for a regular SBA loan.
Without these reduced fees, a small business might conclude that an SBA loan costs too much. But there is another way, and it is known as invoice factoring.
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