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Loans to Small Businesses Plummet
Loans backed by the Small Business Administration dropped significantly after stimulus incentives dried up.
Posted 7/ 14 10 at 4:30 PM | News, Money, Starting a Business, Taxes & Accounting, Financial Services
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A A AAfter a noticeable increase thanks to stimulus perks, loans backed by the Small Business Administration tumbled in June after funding for the incentives dried up. The total value of SBA loans made dropped almost two-thirds, from $1.9 billion in May to $647 million in June.
The drop in small-business loans comes amid the ongoing financial reform debate in Congress.
The economic stimulus upped the guarantee on the SBA's flagship 7(a) loans 90 percent instead of 75 percent and reduced or waived fees on the 7(a) and 504 loans. These incentives were added to bolster lending practices after the recession began in 2008.
The Senate is currently considering a small-business reform bill, which would extend support for SBA lending by decreasing fees and increasing guarantees. If it passes the Senate vote, which could occur next week, the bill will then move to the House.
The drop in small-business loans comes amid the ongoing financial reform debate in Congress.
The economic stimulus upped the guarantee on the SBA's flagship 7(a) loans 90 percent instead of 75 percent and reduced or waived fees on the 7(a) and 504 loans. These incentives were added to bolster lending practices after the recession began in 2008.
The Senate is currently considering a small-business reform bill, which would extend support for SBA lending by decreasing fees and increasing guarantees. If it passes the Senate vote, which could occur next week, the bill will then move to the House.
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Comments (Page 1 of 1)
If a small business has survived at least 3 to 5 years and they have demonstrated a business plan that can generate a profit, then what they need right now is MONEY. Banks of course are attuned only to lend money with an asset as collateral. But small businesses have already used up whatever lines of credit they had...and they've probably sold whatever assets they could just to survive to this point. So what should be changed in our system?
1) Banks need to look at the ability of a business to make money based on the history of the business, the business plan, and the assesment of the viability of the market they are in...NOT which asset can be liened!! Bankers have to be "business people"...not accounting monkeys who say they will lend you 50% of the value of a hard, marketable asset....
2) The Tax Code treatment of a Sub S corporation is that the profit or loss of a business will be allocated proportionately to the shareholders. If we all could have seen the debacle coming we would all have gone Sub S from the beginning...but many of us did not do this. We have plenty of "Loss" that we will use in the future to apply against our future "Profit"...but we need that advantage RIGHT NOW!!! I am suggesting that we make the allocation provisions retroactive to ANY small business with say less than $10 million in sales or assets. Allow us to carryback these losses for the past say 5 years so we can claim refunds of our personal taxes that we have already paid....LEND US BACK OUR OWN TAXES THAT WE'VE ALREADY PAID!!! Why? This may allow many of us to "get a loan" without having to solicit the banks...and wasting more time as the economy sits in the doldrums. These comical suggestions by politicians and so-called economists that they are going to give us a "tax credit" to hire someone or give us some "accelerated depreciation" if we buy an asset (remember we don't have the CAPITAL to hire someone or buy much of anything...) is an astounding example of naive thinking.
Agree with you completely. The politicians have no business experience whatsoever and are crafting laws and rules. What a mistatke! What a mess!
This what happens when you have most of the media taking sides in their rewportring, instead of looking out for the poeple who pay for their product.
Gee, maybe that is why they are all strugling to make payrole.
If they would have given the American poeple the truth about Obama and his far left associates instead of only thing about anyone who opposes his decissions, we may not be as bad off as we are now. Thank you ABC, CBS, NBC, CNNN, MSNBC, and all of you other blind news reports.
SBA is a joke. The 8 month ordeal was too much. We bailed on them and never looked back. Great credit, 20% down, full collateral were not enough. They drain you to the point its not worth it.
help i am a small business owner of retail mens clothing for the past 33 yrs my company is a s corp,me and my family members have worked hard to establish this business with a good customer base ,we have paid all our taxes over the years on time but now when we need help with addtional financial help were is the goverment at this time ????????????? ofcourse banks will loan money to poeple already have but not help who have coladerall they consider small business as high risk even though one has a growing business sopported by 5 yrs 10 yrs financial statements.
goverment was suppose to help small businesses through banks loans were is all that money? i waould like to ask uncle sam were is the fiancial support that was promised>>??????????????????????/
Of course the loans are going to plummet. Banks are suffering.
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Could you keep loaning people money if there was none.