Hey everyone, take a look at this info about small business loans.
New small business loans approved in ‘minutes’
NEW YORK (CNNMoney.com) — The Small Business Administration announced two new lending initiatives on Wednesday aimed at getting relatively modest loans to small businesses quickly.
The idea is to get loans under $250,000 into the hands of small businesses efficiently: Applications are only 2 pages long and can be approved in anywhere from “minutes” to 10 days, according to the SBA. Greater access to credit should help spur firms to grow and hire, giving the economy a boost.
“Many entrepreneurs and small business owners across the country have enormous potential to drive economic growth and create good-paying jobs in their local communities, but too often they face barriers in fulfilling that potential,” said Catherine Hughes, chairperson of the SBA’s new Advisory Council on Underserved Communities, in a written statement.
Banks have been slow to lend to small businesses, even as credit availability has eased since the global financial crisis hit. More than three-quarters of small businesses that applied for a loan during the first half of 2010 received only “some” or “none” of the credit they desired, according to a New York Federal Reserve report released in October.
Unlike big corporations, which can issue stock, sell bonds or take other measures to raise cash, small businesses are largely at the mercy of banks for financing.
But big banks have complained that it often doesn’t pay for them to spend time and resources administering a small loan.
The SBA’s new Small Loan Advantage incentive cuts the paperwork burden. Larger banks that are already so-called “preferred” lenders can make loans through its flagship 7(a) lending program up to $250,000, and get them approved quickly by submitting a single-page credit memo, according to Jonathan Swain, assistant administrator for the SBA.
Loans submitted electronically “will be approved in minutes,” according to the SBA. Other applications will be approved within one business day.
Some 630 banks are preferred lenders and have the authority to approve loans independently. As with a normal 7(a) program, the loans are guaranteed at 85% up to $150,000 and 75% over $150,000.
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A second initiative, called Community Advantage, aims to get SBA-backed loans to underserved communities, such as minority-, women-, and veteran-owned businesses, as well as firms in lower-income or rural areas.
The program encourages borrowers to develop a business plan and work with advisors. Applications should be approved within 5 to 10 days.
Instead of banks, the three-year pilot program operates via alternative, community-minded lenders like Community Development Fund Institutions, nonprofit Certified Development companies and approved micro-lending intermediaries. These organizations haven’t previously been able to access government loans through the 7(a) program.
“We are taking steps that will increase the number of places small business owners in underserved communities can go to get loans,” said SBA Administrator Karen Mills in a statement.
For additional information go to http://www.sba.gov