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23 Replies Latest reply: May 14, 2009 3:05 PM by SBA.Guy RSS

Event:   The SBA and Stimulus Package

CommunityTeam Novice
Currently Being Moderated
Want to learn about how the Small Business Administration (SBA) and the Stimulus Package can help your business? Join us for a special discussion with Richard Blewett, National Customer Service Manager of SBA.

In the American Recovery and Reinvestment acting signed by the President on February 17, 2009, the SBA was given a key role in providing incentives to borrowers and lenders alike to help rebuild our financial system. The bill was divided into nine (9) key components that involve both existing SBA loans programs as well as create a new SBA loan program. Some of the bill's provisions have already been implemented and others are still under development but will be announced in the near future.

Richard will be available to answer questions such as:
  • How does the stimulus bill help America's lenders?
  • Which provisions help small businesses either start up or survive in this tough economy?
  • What's all the fuss about the SBA's secondary market?
  • Can the SBA really help pull the country out of this downturn?

About SBA

The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation. We recognize that small business is critical to our economic recovery and strength, to building America's future, and to helping the United States compete in today's global marketplace. Although SBA has grown and evolved in the years since it was established in 1953, the bottom line mission remains the same. The SBA helps Americans start, build and grow businesses. Through an extensive network of field offices and partnerships with public and private organizations, SBA delivers its services to people throughout the United States, Puerto Rico, the U. S. Virgin Islands and Guam.

 

About Richard Blewett
Richard Blewett was hired by the U.S. Small Business Administration as Director of Asset Sales in 1997 to create an asset sales program. Following the sale of approximately 167,000 loans, he managed the start up of the newly created National Guaranty Purchase Center located in Herndon, Virginia. In August of 2007, he was named National Customer Service Manager responsible for managing relationships with the SBA's top lending partners in the nation. He has over 30 years experience in banking, commercial real estate lending and sales and asset management experience.

Post a question now, and then join us on May 14 at 2:00 p.m. EST for a response. Or join us during the event and post a question. Richard will try to answer as many questions as possible, but may not get to all of them. Note, you do not need to register for the event. You simply need to be a member of SBOC to post a question. If you don't have a user ID, join now, it's free.
  • Re: Event:  May 14:   The SBA and Stimulus Package
    myscreenname Newbie
    Currently Being Moderated
    Hi -
    Is this a webinar? How does one join in at 2:00 pm?
    My real question - does this require personal guarantees? What size business qualify?
    Thanks
    • Re: Event:  May 14:   The SBA and Stimulus Package
      SBA.Guy Newbie
      Currently Being Moderated
      The loan terms are negotiated between the borrower and the lender. However, SBA loan programs require personal guarantees. The loan size is a little difficult to answer as each loan program has different size loan caps. The 7(a) loans are $2 million, SBAExpress are $350,000. Development company loans are capped at $1.5 million per project and Microloans are capped at $35,000.
  • Re: Event:  May 14:   The SBA and Stimulus Package
    CommunityTeam Novice
    Currently Being Moderated
    Please welcome Richard Blewett, National Customer Service Manager of SBA. Richard will be posting as user SBA.Guy. We're going to start off by asking Richard some general questions. While we're doing this, if you have a question for Richard please login and post now. If you don't see your question posted, you do not have to repost. We've received it in the queue and will have Richard repond when he gets the chance. Thanks!
  • Re: Event:  May 14:   The SBA and Stimulus Package
    CommunityTeam Novice
    Currently Being Moderated
    Richard - Thanks for taking the time to join us today. Can you please start off by telling us about SBA and its objectives?
    • Re: Event:  May 14:   The SBA and Stimulus Package
      SBA.Guy Newbie
      Currently Being Moderated
      Very briefly, the SBA's main objective is to help our nation's small businesses obtain financing when they might not be eligible through normal lending channels. They do this by providing a federal guaranty to private lenders for a percentage of the loan amount. Should the loan go bad, the SBA honors the guaranty and minimizes the lender's loss.
  • Re: Event:  May 14:   The SBA and Stimulus Package
    CommunityTeam Novice
    Currently Being Moderated
    What are examples of some of the resources SBA provides to small business owners?
    • Re: Event:  May 14:   The SBA and Stimulus Package
      SBA.Guy Newbie
      Currently Being Moderated

      Our primary, and most flexible, business loan program is the 7(a) program. Loan proceeds can be used for most sound business purposes including working capital, machinery and equipment, furniture and fixtures, leasehold improvements and others as well.

       


      Our 504 Certified Development Company loan program is designed to provide long-term, fixed rate financing to small businesses to acquire real estate or machinery and equipment for expansion or modernization.

       


      Microloans provide short term loans of up to $35,000 to small businesses and not-for-profit child care centers to pay for working capital, purchase inventory, supplies, FF&E, etc.

       


      The SBA also has a number of Express loan products that are capped at $350,000, have a lower guaranty but a more streamlined application process.

      In addition, the SBA Field Offices offer training and tremendous resources to small buiness owners or those who want to become small business owners. We also have a terrific web site at www.sba.gov
  • Re: Event:  May 14:   The SBA and Stimulus Package
    CommunityTeam Novice
    Currently Being Moderated
    Richard - Can you tell us what is the American Recovery and Reinvestment Act?
    • Re: Event:  May 14:   The SBA and Stimulus Package
      SBA.Guy Newbie
      Currently Being Moderated
      The American Recovery and Reinvestment Act was signed into law on February 17, 2009. It is designed to loosen up the availability of credit to the nation's small businesses. Some specifics from the Act related to the SBA are: termporarily eliminating fees on SBA backed loans and raising the guaranty to 90%; the creation of a new loan program to help small businesses meet existing debt payments; the expansion of the SBA's Microloan program; the increase of our Surety Bond Guarantee program; and several other smaller items.

      All these are designed to make banks more willing to extend credit to small businesses. The waiving of fees and the raising of the guarantee to 90% are designed spefically to address the liquidity crisis in the lending community. The waiving of guarantee fees is designed to allow the borrower to keep more cash for use in the business.
  • Re: Event:  May 14:   The SBA and Stimulus Package
    CommunityTeam Novice
    Currently Being Moderated

    Can you share with us the provisions that will help existing small business owners?
    • Re: Event:  May 14:   The SBA and Stimulus Package
      SBA.Guy Newbie
      Currently Being Moderated
      As mentioned earlier, The Recovery Act was enacted to help unfreeze the lending community. As many banks are facing severe liquidity problems, they have been unable or unwilling to continue to put loans on their books. The SBA, by waiving guarantee fees makes it cheaper for borrowers to obtain financing and the increase in the guarantee to 90% lowers the lenders overall risk of loss.

      In addition, the SBA will be coming out soon with a short term emergency cash flow loan to help borrowers make business loan payments during this credit crisis. These and other things are all meant to draw lenders back into the SBA marketplace to aid small businesses.
  • Re: Event:  May 14:   The SBA and Stimulus Package
    Fighter1 Newbie
    Currently Being Moderated
    Richard - most lenders are asking for 20-30% of personal money. I have never had access to the kind of capital being asked for to secure an SBA loan. I am looking for $650,000 and can come up with 10%.

    We are all suffering and want to break out of this with great business ideas. The high levels of personal financial input is squelching many, many businesses from ever getting off the ground.

    What is BofA doing to help?

    I'll apply with you today if I can work at 10%
    • Re: Event:  May 14:   The SBA and Stimulus Package
      SBA.Guy Newbie
      Currently Being Moderated
      Fighter 1: The down payments are normally a function of the lenders views of the risk associated with the loan. Our 504 long term fixed rate loans for real estate and major machinery and equipment require a 10% down payment, a 40% first mortgage loan from a bank and a 50% loan by a certified development company. Other programs also have flexible terms. My suggestion would be to contact the SBA office closest to you and go in and have them look over your business plan. Possibly some help there may cause the lender to look more favorably on your request. Good luck.
      • Re: Event:  May 14:   The SBA and Stimulus Package
        Fighter1 Newbie
        Currently Being Moderated
        Thanks. Did not know the rates had variability based on perceived risk. Nobody ever told me that.
        7(a) and 504 financing going to give me about the same opportunity in the end?
        • Re: Event:  May 14:   The SBA and Stimulus Package
          SBA.Guy Newbie
          Currently Being Moderated
          Fighter 1: Our 7(a) program is much more flexible. Loan proceeds can be used for most sound business purposes including working capital, machinery and equipment, furniture and fixtures, leasehold improvements and others as well. The 504 Program is specifically for the purchase of real estate or make machinery and equipment or business expansion or moderization. If you need more than $350,000 and it is not real property, then I would say the 7(a) program is your only option. Again, see if our web site or district offices can assist you.
  • Re: Event:  May 14:   The SBA and Stimulus Package
    CommunityTeam Novice
    Currently Being Moderated
    What progress has been made so far?
    • Re: Event:  May 14:   The SBA and Stimulus Package
      SBA.Guy Newbie
      Currently Being Moderated
      The SBA immediately looked at the provisions of the Recovery Act that could be done quickly and that would have an immediate impact. The fee elimination and the increase in the guarantee to 90% are already in place and SBA lending has increased 25% compared to the weeks just prior to the Act being signed. The SBA views this as a sign that the banks are coming back into the market. Since signing the Act, more than 10,000 SBA loans have been made representing $3 billion in credit to support small businesses. The raise in the Surety Bond guarantee to $5 million has been implemented and the new short term cash flow loan program should be rolled out in the near future. The SBA is also working on several new stimulus provisions to help unfreeze the SBA Secondary Market, which also will lead to incresed SBA lending.
  • Re: Event:  May 14:   The SBA and Stimulus Package
    CommunityTeam Novice
    Currently Being Moderated

    What is the secondary market for SBA loans? Can you tell us more?
    • Re: Event:  May 14:   The SBA and Stimulus Package
      SBA.Guy Newbie
      Currently Being Moderated
      The secondary market allows SBA lenders to originate SBA loans and then sell the guaranteed portions to private or institutional investors. In normal times the loans sell at a premium and thus, the lender can maintain servicing income but lower the banks exposure by the sale of the guaranteed amount. When the economic crisis hit, the secondary market became very slow and volume and premiums dropped dramatically. Over the last two months, the SBA is seeing more volume, more bidders and also, higher premiums. Should the market relapse, the ARRA authorizes the SBA to help finance investors in the secondary market tp allow then to purchase pools of loans or the SBA can purchase pools of loans directly. This has not been implemented yet, but the SBA is working on plans should it become necessary.

      A viable secondary market allows numerous lenders nation wide to make loans that they cannot keep for their own portfolios due to liquidity issues. With the market active, more lenders will make more loans and that will help re-energise our small businesses.
    • Re: Event:  May 14:   The SBA and Stimulus Package
      Robe1092 Newbie
      Currently Being Moderated
      Hello Richard: so would the 7 (a) loan be the most appropriate for someone looking to buy a piece of equipment costing $50,000 and then planning to use the said piece as their primary business function. Are fixed rates available for the 7(a) programs? Thank you
      • Re: Event:  May 14:   The SBA and Stimulus Package
        SBA.Guy Newbie
        Currently Being Moderated
        Robe1092: In looking for $50,000 you have several options: the SBAExpress loans carry a lower guarantee but have a streamlined application process and a cap of $350,000. The 7(a) program may also apply. You should also inquire about our Patriot Express loans for veterans and Community Express loans for rural and underserved markets. Fixed rates are available and maturites vary from program to program. Good luck.

        Note: Information on all these programs is available at www.sba.gov
  • Re: Event:  May 14:   The SBA and Stimulus Package
    CommunityTeam Novice
    Currently Being Moderated
    Richard, thanks so much for your time today. In closing, what resources can you recommend to find out more detailed information?
    • Re: Event:  May 14:   The SBA and Stimulus Package
      SBA.Guy Newbie
      Currently Being Moderated
      If I seem to be stuck on this point, I guess I am. Training and resources are such an important part of help small business owners or those who want to start or buy a small business. The SBA has worked incredibly hard to amke these resources easily available. The two best way to learn more about the SBA is at our website, www.sba.gov, and through our 68 district offices spread throughout the nation. The website has valuable information on how to start a business, write a business plan, prepare financial statements, do marketing and many more subjects. Please take advantage of these free resources and good luck in pursuing the American Dream.

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