New Lending Sources For Small Business
There has been a shortage in funding sources since the credit market decided to hide in it's shell for the last several months. Big banks have decided to hold off on lending to raise capital, buy competitors, and pay bonuses, the smaller community banks were always a bit strict to begin with and the government is running out of its bailout dollars. The SBA has been given a few more months of funding to increase the guarantee and cut fees for their two flagship loan programs, the 7(a) loan program and the 504 commercial loan program. The SBA has been a great small business finance funding source for the small business community pushing about $6.5 billion into the hands of small business and attracting over 1,600 banks back to the SBA program. However, this is not enough to sustain small business growth in this country. There has been a new fund put together by Goldman Sachs and the US Government that will entertain about $300 million to small business lending. Now, this may not seem to be much however, considering no one else seems to be doing anything and that this amount doubled from last years $107 million. Goldman could have given these funds to anyone, instead they chose the CDFI for dispersement of the funds. CDFI is a Community Development Financial Institution, a certification conferred by the US Treasury Department. The program will entertain low interest government loans, grants and tax credits to organizations that specialize in economically developing low-income and otherwise undeserved markets. Financial institutions across America have to qualify to receive money from this fund to in-turn, lend out. Applications for these funds from small businesses have gone through the roof. According to the Opportunity Fund, one of California's CDFI's, you can expect these small business loans to range from $5,000 to $200,000 (Higher amounts must be further qualified) with interest rates floating around 9% with terms from 1 to 7 years. There is a great story about a woman that got a loan for her day care center in less then two weeks where other loans can take up to 6 months. These are the kind of stories that keep me going everyday in finding hope for our small business community. The government has finally put it's hands around the small business issues regarding access to capital. Everywhere I go on the net I am now hearing about what is to come for small business loans and capital access in the new year. I am excited to see what the new year brings.
0 comments - Posted by Tom Markel III at 1:13 PM - Categories: Trey Markel's Blog
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