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    0 Replies Latest reply on Oct 20, 2009 10:12 PM by JasonTees

    SBA vs. Sub-Prime: What’s The Difference?

    JasonTees Wayfarer
      As most people know, a large driver behind the current economic
      recession was all the residential mortgages that banks were giving out
      money to unqualified borrowers.

      Once the You-Know-What hit the fan, people began pointing fingers at
      mortgages brokers, bankers, lenders...basically anyone who was
      originating loans. People were outraged. "They gave me a loan that I
      could not afford!" they yelled "Banks are reckless, they knew I was
      unqualified and set me up to fail!".

      Well folks, did you know that the Small Business Administation (i.e.
      THE GOVERNMENT) offers the equivalent of sub-prime loans to small
      businesses? And just like the sub-prime mess, SBA guaranteed loans are
      now dropping like flies.

      Here's the worst part. Guess who is suffering due to all this
      lending to unqualified business owners? The small business owners
      themselves. People who put up cash, their homes, and offered their
      personal guarantees are now facing bankruptcy or worse as their
      businesses crumble. At a time when banks (ie prudent lenders) were
      telling them no, the SBA (ie your government!) was inviting them to
      borrower hundreds of thousands of dollars.

      The SBA offers to guarantee debt in order to compel lenders to lend
      to borrowers that they would not otherwise lend to. In other words, the
      SBA promotes lending to unqualified buyers!

      (Distressed Loan Advisors offer consulting services to small businesses, and can be reached at www.JasonTees.com)