You are searching about The Flow Of Legislative Work In Congress Is Controlled By, today we will share with you article about The Flow Of Legislative Work In Congress Is Controlled By was compiled and edited by our team from many sources on the internet. Hope this article on the topic The Flow Of Legislative Work In Congress Is Controlled By is useful to you.
Small Business Loan Update – Stimulus Bill Helps Bailout Businesses If They Cannot Pay Loans
As we continue to diligently sift through the more than 1,000 pages of the American Recovery and Reinvestment Act of 2009, there’s one provision that doesn’t get much attention, but could be very helpful to small businesses. If you’re a small business and you’ve received an SBA loan from a local banker, but you’re having trouble making payments, you can get a “stabilization loan.” That’s right; finally some bailout money is going into the hands of small business owners, instead of going into the proverbial deep hole of the stock market or big banks. But don’t get too excited. It is limited to very specific cases and is not available to the vast majority of business owners.
There are newspaper articles that boldly claim that the SBA will now provide relief if you have an existing business loan and are having trouble making payments. This is not a true statement and needs to be clarified. As seen in more detail in this article, this is wrong because it refers to future problem loans, not existing ones.
Here’s how it works. Let’s say you’re one of the lucky few who found a bank for an SBA loan. You continue on your merry way, but fall into hard economic times and will have a hard time coming back. Note that these are not regular loans, but loans from an SBA-licensed lender guaranteed by the US government for default through the SBA (depending on the loan, between 50% and 90%). Under the new stimulus law, the SBA may be able to help you. You will be able to get a new loan with which you will settle the existing amount under extremely favorable conditions, which will buy you more time to revitalize your business and get back in the saddle. Sound too good to be true? Well, you be the judge. Here are some features:
1. Does not apply to SBA loans made before the stimulus law. As for non-SBA loans, they can be pre- or post-enactment.
2. Does it apply to SBA guaranteed loans as well or to non-SBA conventional loans? We don’t know for sure. This statute simply states that it applies to “a small business concern that meets the eligibility standards and section 7(a) of the Small Business Act” (Section 506(c) of the new Act). This contains pages and pages of applications that can apply to both types of loans. Based on some of the SBA’s preliminary reports, this appears to apply to both SBA and non-SBA loans.
3. These funds are subject to availability in Congressional funding. Some think the way we’re going with our federal bailout, we’ll run out of money before the economy we’re trying to save.
4. You don’t get this money unless you are a viable business. Man, you can drive a truck through that phrase. Our friends at the SBA will determine if you are “viable” (imagine how inferior you will be when you have to tell your friends that your job has been determined by the federal government to be “not viable” and on life support).
5. You must be suffering from “imminent financial hardship.” So much for holding off on paying because you’d rather use the money for other expansion needs. How many months you have to be delinquent or how close your foot is to the banana peel of complete business failure is anyone’s guess.
6. It is uncertain, and commentators disagree, as to whether the federal government through the SBA will make a loan from taxpayer dollars or private SBA-licensed banks. In my opinion, the latter. It carries a 100% SBA guarantee and I wouldn’t make sense for the government itself to make the loan.
7. The loan cannot exceed USD 35,000. It is likely that the new loan will be a “write-off” or refinancing of the entire balance on the old one. So if you had a $100,000 loan that you’ve been paying on time for a few years, but now you have a $35,000 balance and you’re in trouble, man, we have a program for you. Or maybe you have a smaller loan of $15,000 and need help after a short time. The law doesn’t say you have to wait a certain period of time so I guess you could be behind after the first few months.
8. You can use it to compensate no more than six months of monthly delays.
9. The loan will be for a maximum period of five years.
10. The borrower will pay absolutely no interest for the duration of the loan. Interest may be charged but will be subsidized by the Federal Government.
11. Here’s the great part. If you get one of these loans, you don’t have to pay anything for the first year.
12. There are absolutely no upfront fees allowed. Getting such a loan is 100% free (of course, you have to pay the principal and interest after the one-year moratorium).
13. SBA will decide whether collateral is required or not. In other words, if you have to put a lien on your property or residence. I suspect they will relent on this request.
14. You can get these loans until September 30, 2010.
15. Since this is an emergency law, within 15 days after the law is signed, the SBA must issue regulations.
Here’s a summary of the actual legislative language if you have trouble sleeping:
SEC 506. BUSINESS STABILIZATION PROGRAM. (a) IN GENERAL- Subject to the availability of approved funds, the Administrator of the Small Business Administration shall operate a program to make loans on a deferred basis to viable (as such term is determined pursuant to a regulation of the Administrator of the Small Business Administration) small businesses that have a qualifying small business loan. companies and are currently in financial difficulties.
(b) ELIGIBLE BORROWER – A small business concern as defined in section 3 of the Small Business Act (15 USC 632).
(c) QUALIFIED SMALL BUSINESS LOAN – A loan made to a small business that meets the eligibility standards in section 7(a) of the Small Business Act (15 USC 636(a)) but does not include loan guarantees (or loan guarantees) by the administrator before the date of entry into force of this Act.
(d) LOAN SIZE – Loans guaranteed under this section may not exceed $35,000.
(e) PURPOSE – Loans guaranteed by this program will be used to make periodic payments of principal and interest, in whole or in part, on an existing qualified small business loan for a period not to exceed 6 months.
(f) LOAN TERMS – Loans under this section:
(1) have a 100 percent guarantee; and
(2) have the interest fully subsidized for the repayment period.
(g) REPAYMENT- Repayment of loans made under this section shall–
(1) amortize in a period not exceeding 5 years; and
(2) start only 12 months after the final disbursement of funds.
(h) LIEN- The Administrator of the Small Business Administration may accept any available lien, including subordinated liens, to secure loans made under this section.
(i) FEES – The Small Business Administration Administrator is prohibited from charging any processing fees, origination fees, application fees, points, brokerage fees, bonus points, prepayment penalties, and other fees that may be charged to an applicant loan for loans under this section.
(j) PROVISION- The Administrator of the Small Business Administration shall not issue loan guarantees under this section after September 30, 2010.
(k) EMERGENCY RULE MAKING AUTHORITY- The Administrator of the Small Business Administration shall issue regulations under this section within 15 days after the date of enactment of this section. The notice requirements of section 553(b) of title 5, United States Code, shall not apply to the promulgation of such regulations.
The real question is whether a private bank will lend under this program. Unfortunately, few will do this because the statute is very clear that no fees are to be charged and how the bank can make money if it gives credit under such circumstances. Sure, they could make money on the secondary market, but that has dried up, so they are essentially being asked to borrow out of the goodness of their hearts. On the other hand, it carries the first ever 100% government guarantee so the bank knows it will get interest and won’t be able to lose a single coin. Maybe this will work after all.
But there is something else that the bank would be interested in. In a way, this is a form of federal aid going directly to small community banks. They have swap loans on their books and could easily take the opportunity to get them out of this program. Especially if they were not the recipients of the first TARP money. Contrary to public opinion, most of them did not receive any money. But then again, that might not apply to that mutual bank. Since they typically package and sell their loans within three to six months, it probably wouldn’t even be in the works at that point. It would be in the hands of investors on the secondary market.
Is it good or bad for small businesses? Frankly, it’s good to see some of the bailout money making its way to small businesses, but most of them would rather get a loan in the first place, rather than bail out in the event of default. Unfortunately, this will be of limited use.
Wouldn’t it be better if we just expanded our small business programs so more businesses could get loans? How about the SBA creating a secondary market for small business loans? I have a new idea: forget about defaults for a moment and focus on making business loans available to start-ups or existing businesses looking to expand.
How about having a program that can pay off high interest credit card balances? There is almost no company that has not been financed by credit cards lately, simply because banks do not give loans. It’s not unusual for people to have over $50,000 on their credit cards just to stay afloat. Talk about high interest savings. You can imagine how much cash flow that would give a small business.
We should applaud Congress for doing its best on short notice to come up with this plan. Sure, this is a welcome form of bailout for small businesses, but I believe it misses the mark when it comes to the majority of the 27 million business owners who are simply looking for a loan they can pay off, rather than handouts.
Video about The Flow Of Legislative Work In Congress Is Controlled By
You can see more content about The Flow Of Legislative Work In Congress Is Controlled By on our youtube channel: Click Here
Question about The Flow Of Legislative Work In Congress Is Controlled By
If you have any questions about The Flow Of Legislative Work In Congress Is Controlled By, please let us know, all your questions or suggestions will help us improve in the following articles!
The article The Flow Of Legislative Work In Congress Is Controlled By was compiled by me and my team from many sources. If you find the article The Flow Of Legislative Work In Congress Is Controlled By helpful to you, please support the team Like or Share!
Rate Articles The Flow Of Legislative Work In Congress Is Controlled By
Rate: 4-5 stars
Search keywords The Flow Of Legislative Work In Congress Is Controlled By
The Flow Of Legislative Work In Congress Is Controlled By
way The Flow Of Legislative Work In Congress Is Controlled By
tutorial The Flow Of Legislative Work In Congress Is Controlled By
The Flow Of Legislative Work In Congress Is Controlled By free
#Small #Business #Loan #Update #Stimulus #Bill #Helps #Bailout #Businesses #Pay #Loans