10th Anniversary Of Small Biz Lending Program Celebrated

$195 million to 468 firms for sake of 5,308 jobs

About ten years ago, a small business lending program called Banking on Business launched, and now, the Federal Home Loan Bank of Pittsburgh (abbreviated FHLBank) has taken stock of what it’s accomplished.  The biggest matter: at least 5,000 people who might otherwise be unemployed have jobs.

FHLBank explained in a statement that the initiative “has provided $195 million in financing to 468 businesses across Delaware, Pennsylvania and West Virginia over the past ten years, creating or retaining 5,308 jobs.”

That’s an impressive accomplishment, since even if the counts were off by half, a whole lot of businesses and individuals received help.

The program has apparently accomplished enough to warrant a congressman’s appearance, too, as Pennsylvania’s Paul E. Kanjorski showed up at a small event.

Kanjorski said, “I am delighted to honor the community lenders who have helped many small businesses to get off the ground, grow, and succeed.  Since its inception, the Banking On Business initiative has, at no cost to taxpayers, created thousands of jobs in the region and assisted hundreds of small businesses to strengthen our local economy.”

Let’s hope many of the banking programs that are starting to get off the ground as we come out of the recession have similar effects.

SBA Offering Low Interest 504 Loans

504 loans dip below 5%

The Small Business Administration’s (SBA) 504 loan program is providing long-term, fixed financing for the purchase of commercial real estate at one of its lowest interest rates in history.

The SBA’s lending partners, Certified Development Companies (CDCs) are working with small business borrowers who are taking advantage of this current low interest rate to purchase or build new facilities.

NADCO, the trade association for the nation’s Certified Development Companies (CDCs), reports that the interest rate for a 20-year SBA 504 loan continued to fall to a low of 4.93% this month. The August bond sale to investors that funded SBA loans was sold at a rate of 3.52%. This low sale price resulted in an effective interest rate – including fees – of only 4.93% for borrowers this month. This interest rate is one of the lowest since the program began in 1986.

The SBA’s 504 loan program provides long-term, fixed rate financing for commercial real estate, and has funded nearly $60 billion in loans to growing small businesses over the past 24 years.

Not only are the interest rates low right now, but one best aspects of an SBA 504 loan is the low down payment required by a borrower.  The down payment is typically only 10%.   CDCs across the country are helping small business borrowers who are taking advantage of these record low interest rates to purchase, build or expand their own facilities.

” A commercial loan below 5% is an incredible rate for 20-year, fixed-rate money,” said Jean Wojtowicz.

“When you consider the drop in the price of commercial real estate and the inventory currently on the market, small businesses have a real opportunity to expand or buy their first building right now.”

Bernanke Calls Again For More Small Biz Lending

Fed chief describes process as “crucial to our economic recovery”

Small businesses that are in need of loans will receive them – or at least become more likely to receive them – if Federal Reserve Chairman Ben Bernanke has his way.  Bernanke stressed the importance of supporting small businesses earlier today.

Bernanke acknowledged this morning that there’s a cause and effect relationship between the availability of money and the possibility of success.  He admitted, too, that the current state of things isn’t exactly great.

Specifically, Bernanke stated according to Tom Barkley, “The formation and growth of small businesses depends critically on access to credit.  Unfortunately, those businesses report that credit conditions remain very difficult.”

Then here’s the key part: Bernanke also said, “Making credit accessible to sound small businesses is crucial to our economic recovery and so should be front and center among our current policy challenges.”

So again, let’s hope all of the right people are listening and follow Bernanke’s recommendations.  Preferably while not increasing the national debt and/or making the U.S. enter another cycle in which loans are way too easy to obtain.  Another recession wouldn’t do anyone much good.

As always, we’ll see what happens.

Sam’s Club Gets Into Small Biz Loans

Move may force banks to be more competitive

Sam’s Club has long been popular among people who like to save money while still buying brand name goods.  Now, it looks like Sam’s Club could also gain favor among small business owners who need to flat-out receive cash, as it’s experimenting with small business loans.

The company stated this morning, “Sam’s Club announced today it is testing an online program with Superior Financial Group, the Nation’s leading Small Business Administration (SBA) lender, which would make $5,000 to $25,000 loans available to its members who qualify.”

As for why this is occurring, the statement explained, “In a November 2009 state of small business survey conducted by Sam’s Club, nearly 15 percent of its business members reported being denied a loan to run their operation, up from 12 percent in April 2009.”

So it sounds like existing Sam’s Club members have created a reasonable demand for these loans.  Let’s hope their needs are met.

This development doesn’t have to just serve that relatively small number of people, though; would-be applicants who aren’t already members can perhaps benefit in multiple ways from joining.  Sam’s Club members are supposed to receive $100 off the application fee, a discount, and a lower APR.

Then, even if you’re not at all interested in getting one of the new loans – or if you’re unable to get one – it’s necessary to consider what sort of effect this move might have on the banking industry.  After all, if Sam’s Club is able to act as a competitor, it may convince traditional banks to resume lending money to small businesses.

As small business owners should know, Wal-Mart, which owns Sam’s Club, has certainly been able to force many companies to lower their prices.

More information about the loans from Sam’s Club can be found by visiting the Sam’s Club site and clicking on the “Services” tab, anyway.  Let’s hope all goes well and the experiment proves successful.

FL Arranges Loans For Businesses Hurt By Oil Spill

Interest-free loans of up to $25,000 for small businesses

If tourists stay away from oil-soaked beaches in Florida this summer (or at least what they perceive to be oil-soaked beaches), small businesses in the state stand to lose a whole lot of money.  Fortunately, Florida’s government is trying to help out by ensuring that interest-free loans are available.

Two points we’ll get out of the way up front: yes, it would be more satisfying if this money was coming from BP.  Also, the loans aren’t huge.

Still, Marcia Heroux Pounds reported yesterday, “Interest-free loans up to $25,000 for 12 months will be available to small business owners with less than 100 employees in counties affected by the oil spill,” with applications becoming available on June 14th.

That should help some businesses in a significant way, and at this point, it seems likely that the national government (and perhaps several class action lawsuits against BP) will be able to kick in an additional sum of money sooner or later.

Also, BP will no doubt join Florida’s tourism board in telling everyone that the area’s still safe and beautiful, so small business owners might have some extra advertising working in their favor in that sense.