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If your business is struggling financially, it will be tough to qualify for an SBA loan. The SBA guaranty for 7a loans is only for 75% of the loan amount, so the lender will still have to hold 25% of the loan which means they are being very selective. The trend right now is to lend to transactions that involve commercial real estate, and to businesses with 1.25x debt coverage or better.

Regarding the Business Stabilization Program. The loans will be only available to companies that already have bank issued business loans (Key here is bank issued) and will provide up to $35K for companies struggling to pay their bills. The SBA will pay the interest on the loan for the first year and the $35K must be repaid in full within five years.

One of the problems with this is that the $255 million the SBA has for this program does not go to loans but goes to help banks with the administration of this program. Thus, banks are not getting new money to lend. Currently, banks are not lending because they don't have money to lend (they overextended themselves over the last few years). Without new money, this program will not work. Banks still will not lend - even if the SBA will pay the interest - banks will look at this as:

If your business is already struggling in paying its bills, why would they give you more money you could not possibly repay?

They don't have the money to lend and cannot/will not borrow it to lend to struggling businesses.

If they do participate, the funding will only go to companies that don't really need the money (not struggling in paying bills).

Just my thoughts

Does anyone know of any banks that are doing the SBA Stabalization Loans yet?

Jim

Ok thank you for the information

While I do appreciate and understand why banks would not lend, this is not a conventional banking scenario that small businesses are facing. I think banks should look at least afford a small business the opportunity to present their case and take into account the historic
profile of their customer and at least try to help them through this period of extended lack of business. Sometimes 1 month can make the difference. Of course there is risk, I guess the banks risk management analysis best determines this. I wonder if the government felt the same way when they handed over billions in TARP money.

On the other hand maybe the goverment should step in immediately in the same way FEMA gets involved with catastrophes and begin qualifying small business that need 2 to 300K immediately to save the business and 30 to 40 employees from loosing their jobs/houses etc.

I firmly believe this is a financial catastrophe and deserves the same urgency to save small business and peoples jobs. Just look at the latest unemployment fiqures.

Stimulas will take too long filtering money through banks! You need to get the money into the hands of small business immediately. It may even be to late.

Already have an Sba504 loan, need to restructure debt or sba7a express to consolidate to improve cash flow, Sba seems to be the easy part, where can i find a bank that will lend it, credit good but not perfect.
Please contact me with any ideas. doug@townlineautogroup.com