This post is under the heading “I’m a small business – how about me?” That is what we are hearing often these days when it comes to at least being able to get some help with a line of credit or all the services small business absolutely has to have in order to be stable and operate. For many years a small business could be certain to be a consistant and good customer at their bank, because as a small business you need your banker from time to time. Well those days are in some serious readjustment by banks in general. A comment heard frequently by good small businesses from their bank is “I am sorry, we can’t renew your line of credit, we are not doing that any longer”
WHAT AM I TO DO? I have been a great bank customer and you treat me like this?! Comments like this come ringing out way too often.
What is there we can find for that business? Here is the answer. SBA! A bit costly for points and a bank prefers the borrower with real estate associated with the loan because it is not as happy with a 7(a) loan these days that doesn’t have real estate with it. There are a few banks that are doing some uncommon SBA lending, but for the vast majority of small business, that is not the case. If you read the previous post on this site, you will see some statistics that show that SBA is becoming the predominate source of lending with a pretty large increases in loan volume (number of loans) and the SBA is attempting, rumor has it, to increase to $5 million.
Does your small business qualify? Do they really need to take a 2nd position on my house and make it impossible for me to refinance the home, is there really a pre-payment penalty on the home portion as well? YUP!
The line of credit is always the best way to go, you only pay interest on what you have used. When you get it paid down, the line is there again if you need it down the road. With the SBA you take all the funds and pay the interest on the entire amount. I have been told that there are some exceptions, but I only know of one. The interest rate is fine, but one has to think carefully if the loan is the best choice in this economy.
While the administration is dominated by oil spills, and medicare, and loosing political dominance in congress while in this economy…I submit that the administration BEST put feet on the talk about getting real for small business. Without a confidence level of future stability previously made possible by a line of credit to fall back on if payroll came at a short fall period; there is no intelligent small businessman going to be aggressive in hiring, it is just too risky. So many unemployed will remain unemployed unless some percentage of our entrepreneurs are given a leg up and not a hand out. Just a answer to the question “How about me?”That is all this economy needs. “I will step out if you will support me bank, SBA, or?”
Confidence begats confidence. Talk to me…Or look at my blog.