SBA to the rescue!! More money available for existing SBA borrowers having trouble paying their SBA guaranteed loans. Just what we need!
Of all of the administration’s small business initiatives, the one that they hope will most directly help struggling small business owners is a new “business stabilization loans” program that will ‘back bank loans of up to $35,000′ for business owners who are having trouble keeping up with payments on previous loans. The fresh cash infusion is intended to free up money that business owners can then use to pay their bills and their employees.
The Recovery Act gave the SBA just 15 days to come up with guidelines for the entirely new program – a deadline that the SBA missed last week. The SBA will have more information available for banks and business owners as soon as possible, agency officials said.
We shall see what the brain trust does, it appears to be a nice idea for businesses that can still afford the debt service going forward but for some reason -wonder what- fell into arrears.
The real solution is a debt workout reducing the principal dramatically. This is the only solution.
If your business cannot make the current payments additional borrowing will only serve to deepen the hole you’re in -not improve the situation. How does increasing their debt load by further borrowing help small business owners survive the reduced revenues that is creating their problems? Simply put, it doesn’t.
So what’s he point of lending businesses -who are already having trouble paying their SBA debt service- more money that they must then pay back?
Makes little sense to me unless the SBA honestly believes the economy will turn around in the next month or two, thus restoring the borrowers cash flow, their gross revenues and profitability sufficiently so that not only the original loan, but now also the new loan can be repaid.
What are they smoking?
It does not seem logical to lend money to companies that are struggling or even failing to service their current debt – the real issue is weather or not the company is operating profitably. If the debt is funding operating losses, then the whole will get deeper. If the debt is covering a recent spike in inventory or AR, or a recent reduction in payables, then it may actually be a temporary cash flow issue that the additional debt can help solve.
Not that I’m totally impressed, but this is more than I expected when I found a link on Digg telling that the info is quite decent. Thanks.
WE HAVE AN SBA LOAN THAT HAS OUR HOME AS GUARANTY
WE HAVE BECOME DELINQUENT AND ARE TRYING TO GET A
LOAN MODIFICATION OR PAYMENT REDUCTION SO WE CAN CONTINUE MAKING OUR PAYMENTS AND NOT LOOSE OUR HOME.
PLEAE LET ME KNOW HOW TO GO ABOUT THIS.
Call me we should talk, there is much we can do that is better then what you are thinking…
413-584-2581 ask for Norm. He will arrange a no-obligation tele-conference.
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I agree completely, but this is what the brain trust is doing…and more debt in losing situations to cover their own (SBA) defaults is the silliest program imaginable, but this is what we have.