The Small Business Voice

I wrote some time back about the challenges that many small business owners were having in obtaining financing. Some of these businesses would probably have qualified for the financing they need just two years ago.

A big part of the problem is that banks are still too skittish. We’ve seen the folks responsible for making loans go from one extreme to the other. Just a couple years ago we heard of people applying for an receiving credit in the name of young children, and even heard of a bank who sent a pre-approved credit card for someone’s dog.

Now some banks are even calling loans and lines of credits that are performing under the terms of the contract.

Even after that’s been said there may be a glimmer of hope.

I ran across an article by Dave Copeland in the Boston Globe which discussed the fact that SBA loan guarantees have increased based on the availability of funding in recently passed Federal Stimulus Bill (American Recovery and Reinvestment Act).

Some highlights include:

- $730 million allocated for Small Business Loans
- Increase in loan guarantee percentage to 90% from 80% [On 7(a) Loans]

Some eye openers in the article included:

- 73% increase in small business loans in Massachusetts since the Stimulus Bill passed
- Even with the Stimulus SBA backed 35% fewer loans in 2009 than in 2008
- Total amount loaned through SBA guarantees dropped by 27% from 2008 to 2009

The way 7(a) loans work is that customers apply for a loan through a participating bank and if necessary, and if the customer meets the SBA’s criteria, then the SBA will guarantee the loan and basically as as a cosigner.