Incentives outlined on small business borrowing
By Connie Cartmell, ccartmell@mariettatimes.comFact Box
For more
information
Ohio Small Business Development Center at Marietta, 308 Front St., 373-5150.
Stimulus bill
at a glance
The federal stimulus bill provides $750 million to the Small Business Administration and makes changes to the agency's lending and investment programs, so they can reach more businesses that need help.
Funding includes:
$375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares, up to 90 percent for certain loans.
$255 million for a new loan program to help small business meet existing debt payments.
$30 million for expanding SBA's Microloan program.
$20 million for technology systems to streamline SBA's lending and oversight processes.
$15 million for expanding SBA's Surety Bond Guarantee program.
$25 million for staffing to meet demands of new programs.
$10 million for the Office of Inspector General.
Source: U.S. Small Business Administration.
The floodgates may not be thrown open, but there is now a bit more wiggle room for small businesses to secure loans to expand or add equipment because of the federal stimulus bill.
"What this means is that our highest (loan) guarantees to lenders that were 75 to 80 percent are now 90 percent," said Thomas Mueller, district director of the U.S. Small Business Administration.
This makes it easier for a small business to borrow from their local lender and less risky for the lender.
Mueller and Douglas Sweazy, business development specialist, were in Marietta Wednesday, speaking with lenders, representatives of the Small Business Development Center and media to introduce the changes.
The SBA will temporarily raise guarantees and eliminate fees to borrowers.
"It's also the first time fees have been eliminated. There are no fees now, where before, for a loan of $100,000, fees were about $2,000," Mueller said.
The aim is to get money flowing again, he said. It is hoped the loans will foster community development, create jobs and encourage modernization.
These loans offer growing small businesses long-term, fixed-rate financing for major fixed assets, such as land, buildings and machinery and equipment.
Michael Iaderosa, vice president and business development officer of Peoples Bank, said the bank recently introduced a small business initiative with added emphasis on small business loans.
"We believe that small business is the backbone of the economy," he said. "We've been making loans right along, not a flood of loans, but a number. Entrepreneurs are very concerned about incurring more debt. They have been very conservative."
A new marketing program at Peoples is expected to be introduced later this month, he said.
A small business that is viable, with cash flow and good credit should be an excellent candidate for a loan, Iaderosa said.
The Treasury Department will commit up to $15 billion to help unlock the secondary markets for small business loans.
"It's a great time to borrow money," Sweazy said. "Interest rates are great."
The bill also authorizes refinancing for certain SBA loans so borrowers can expand their businesses on favorable terms and expands leverage capability for Small Business Investment Companies.
In the region, 99 percent of businesses are small business, said Pamela Lankford, director of the Ohio Small Business Development Center in Marietta.
Because southeast Ohio has not been as active as other parts of the state when it comes to SBA lending, she is optimistic about this incentive for lenders.
"I see this as a very, very positive direction for our region," Lankford said.
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boots65
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04-02-09 12:46 PM
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Seems like this will be a great help to Joe the Plumber.
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newsnut
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04-02-09 11:47 AM
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only government create real jobs
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LilyOValley
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04-02-09 11:45 AM
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It seems to me that all the folks yammering and yammering about government 'waste', should now step up and PROVE that the private sector can actually create jobs, like they claim they can. Last month of course, it seems private sector destroyed about 742K jobs. Now, maybe they can make a few back...
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LilyOValley
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04-02-09 11:42 AM
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Gee, the Mareitta intelligensia seems to lack faith in their representative government. So, does Avid KNOW the figures he cites are going to 'pay raises'? That is far less than clear to me...
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UncleGrunt
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04-02-09 11:39 AM
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Most of this money will be soaked up in the pipeline by the bureaucrats and lenders; only a relatively small fraction will make it to the business.
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AvidReader
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04-02-09 9:14 AM
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$25 million for staffing to meet demands of new programs. $10 million for the Office of Inspector General Equals PAY RAISES FOR THE BIGWIGS!
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