Small Business News

Small Business News

Banks Pledge $20 Billion in Small-Business Loans

September 20, 2011, 2:44 PM ET

Not all lenders are out of the game. SBA Lenders are booking loans for Alacom's 504 loan and the 7a loan referrals.

Some of the nation’s biggest banks on Tuesday pledged to boost lending to small firms by an extra $20 billion over the next three years. The move, announced by Vice President Joe Biden at a small business in Solon, Ohio, comes as loans guaranteed by the Small Business Administration hit record highs. As of last week, the agency has approved more than $18 billion in lending under its 7(a) and Arc loan programs this fiscal year, up from $12.4 billion in 2010 and $8.6 billion in 2009, agency lending data show. Earlier this month, Wells Fargo became the first lender to issue more than $1 billion in SBA loans in a single year. The next top nine lenders combined have issued some $3.5 billion.
Read the rest of the story here  Wall Street Journal Blog

SBA 504 Loans Hit Record Low Interest Rates for September - Estimated 4.69% on 20-year and 3.75% on 10-year Loans

September 7, 2011 NADCO News Release SBA 504 Loans Hit Record Low Interest Rates for September - Estimated 4.69% on 20-year and 3.75% on 10-year Loans

McLEAN, VA -- The Small Business Administration's (SBA) 504 loan program is providing long-term, fixed rate financing for commercial real estate and the purchase of long-term capital assets at the lowest interest rates since the program's inception. The SBA's lending partners, Certified Development Companies (CDCs) are busy working with small business borrowers who are taking advantage of these great rates to finally purchase or build their own facilities or acquire long term capital assets such as equipment and machinery.

NADCO, the trade association for the nation's Certified Development Companies (CDCs) reports that the interest rates for both the 20-year SBA 504 loan and the 10-year SBA 504 loan have hit record lows for projects funded in September 2011.

The debentures that funded this month's 20-year 504 loans were sold to investors at an interest rate of 2.85% falling below the previous low of 3.88% in June of 2010. The 10-year loan debentures were sold at an interest rate of 1.53% which eclipses the previous low of 1.81% in November 2010.

The official interest rates should be published by September 12, but it is expected that the low rates for the debenture sales this month will result in estimated effective interest rates for small business borrowers -- including servicing fees -- of only 4.69% for a 20-year loan. For a 10-year loan the estimated effective interest rate is a low 3.75% for September.

Chris Crawford, NADCO President commented, "This is an incredible rate for a 20-year, fixed rate commercial loan, especially when you consider down payments can be as little as 10%. For those small businesses that have been considering investing in their own facilities or upgrading their equipment, there has never been a better time to take advantage of these record low interest rates. Also with commercial properties plentiful and the 20-year interest rate sitting at roughly 4.69 %, the 504 loan is an extremely attractive financing option right now.

The Small Business Administration's (SBA) 504 loan program provides long-term, fixed rate financing for small business owners nationwide. Since the program's inception 504 loans have funded over $62 billion in loans to over 130,000 small businesses. In turn, those small businesses have created or retained over 2.1 million jobs for our national economy. Certified Development Companies (CDCs) continue to work with small business owners who are taking advantage of these record low interest rates to purchase, build and expand their facilities or purchase capital intensive machinery and equipment.

SBA 504 loans are designed to cover up to 40 % of a project's costs with a maximum of $5 million in funding, however, the CDC partners with a bank that provides 50% of the project financing and the borrower typically puts in 10% as a down payment. SBA 504 loans can go as high as $5.5 million for manufacturing projects and most green projects. In fact, more and more small businesses are seeing the benefit of retrofitting existing properties or building new facilities with energy savings technologies. SBA 504 loans can fund up to $5.5 million on these projects. When you add in the bank loan and the small business contribution, total project costs can sometimes go as high as $15 million if the bank decides to fund more than 50%.

There are still deals to be made on commercial properties that are currently on the market at very attractive prices. If a small business has been considering investing in a building, now is a great time to act. "With these historical low rates, and no up-front fees, business owners should act now. Our CDC members are working diligently with our bank partners, and we have money available for sound small business projects." Crawford said.

Crawford went on to say, "There is just no better deal available today for the purchase of real estate or for expansion of existing facilities. I urge any business owner who is seeking financing for commercial real estate or equipment purchases to call their banker or contact the NADCO offices at 703-748-2575 to find a CDC in their area. A CDC can promptly answer any and all questions and let business owners know if their projects will work for an SBA 504 loan."

About the National Association of Development Companies (NADCO):

Created in 1981, the National Association of Development Companies is the trade association for America's Certified Development Companies (CDCs). Certified by the U.S. Small Business Administration, CDCs are community-based economic development organizations that serve their local communities and states, and are dedicated to the promotion of small business expansion and job creation through SBA's 504 Loan Program. In addition to the 504 program, many CDCs also provide small businesses with access to other Federal, state and local economic development loan programs. These programs provide both long and short term funding for borrowers.

Based in the suburbs of Washington, D.C., NADCO provides legislative and regulatory support for the 504 Loan Program on behalf of CDCs, the program's lending partners (including first mortgage lenders, attorneys and others allied to the industry), and 504 small business borrowers. For more information, please call (703) 748-2575 or visit www.nadco.org.

To receive all of NADCO's News Releases via email, please contact Merril Levesque at merril@nadco.org

" Can You Handle The Truth?"

Smaller Businesses Seeking Loans Still Come Up Empty By

 EMILY MALTBY @ The Wall Street Journal

Small businesses expected 2011 to be the moment a years-long credit freeze would finally begin to thaw. But borrowing has only gotten worse.

Loans outstanding to small businesses totaled $609 billion at the end of March, an 8.6% drop from a year earlier, according to the most recent data from the Federal Deposit Insurance Corporation, which analyzes loans of less than $1 million.

Another lending analysis, by the Federal Reserve Bank of Kansas City, shows that big banks' outstanding loans to small businesses dropped 14% between March 2010 and March 2011, while loans by smaller lenders fell 3%. .......Read More

Sniping at Charges for Swiping Debit Cards

By Robert Schmidt and Phil Mattingly 

Jennifer Cavallaro’s day job is owner of a restaurant in Bristol, R.I. Over the past year she has moonlighted as an amateur lobbyist. She’s one of a small army of business owners who helped beat Wall Street in a fight to reduce the fees banks charge retailers for accepting debit cards, a development that promised to deliver big savings for her Beehive Café—until the Federal Reserve stepped in.

 In December, the Federal Reserve Board, asked by Congress to determine an appropriate fee, proposed limiting payments to 12¢ per transaction. That sparked an outcry from banks, which said the move would mean an end to such perks as free checking and rewards programs. Then on June 29, after being flooded with more than 11,000 comments on the plan and meeting with scores of companies and interest groups, the Fed issued its final ruling: a cap of 21¢ per transaction, effective Oct. 1. Although still lower than the average 44¢ retailers now pay, the decision will preserve billions of dollars in revenue for banks. “I hate to sound like a conspiracy theorist, but what happened in between?” Cavallaro says. “This was definitely a surprise.” If the central bank had expected to end the debate by effectively splitting the difference, it was mistaken. “Call it the least worst way to do the wrong thing,” says Scott Talbott, a lobbyist for the Financial Services Roundtable, an association of large financial companies. “Let’s just say the Fed took a swing at reform, and they whiffed,” says David French, the top lobbyist for the National Retail Federation. The group is studying whether the central bank adhered to Congress’s instructions to determine standards that are “reasonable and proportional” to banks’ costs in handling debit-card transactions. “There is certainly a legal option that could be pursued,” French says.......Read More

Senators Introduce Legislation To Remove Tax Burden On Gold And Silver Coins

On June 28, Senators Jim DeMint (R-S.C.), Mike Lee (R-Utah) and Rand Paul (R-Ky.) introduced the Sound Money Promotion Act, which would allow legal tender gold and silver coins to be considered in the same manner as United States currency for taxation purposes. Thirteen states have recognized gold and silver coins as legal tender, but currently those coins are taxed as if they were not part of U.S. currency.

“Thanks to the government’s reckless over-spending, continued bailouts, and the Federal Reserve’s easy money policy, this year the purchasing power of the dollar hit an all-time low in the several decades since we went off the gold standard,” DeMint said when introducing the bill to the Senate, according to a press release [1]. “This legislation would encourage wider adoption of sound money measures, and that’s a step in the right direction.”

The State of Utah was the first to recognize gold and silver coins as legal tender; the legislation passed in May of this year. Since then, 12 other States have recognized the hard currency, including South Carolina.

“Good monetary policy is an important part of a healthy and prosperous economy,” Lee reportedly said. “Since the Federal Reserve Act of 1913, the dollar has lost approximately 98 percent of its value. This bill is an important step towards a stable and sound currency whose value is protected from the Fed’s printing press.”