Two of the most underused and least known of the Small Business Administration loan guarantee programs are the SBA Microloan and the SBA 504 Program. Obama is planning on using the 30 billion from TARP for expanding small business lending. The plan includes giving all the funds to community banks. Although this will improve financing conditions for small business, the secret weapons (programs that could use some help) need to also be promoted and funded.
The SBA 504 Loan Program for land, buildings and equipment.
According to the National Association of Development Companies (NADCO), the trade association of Certified Development Companies (CDCs), the SBA 504 Loan Program is a “well kept secret”. CDC’s are approved by the SBA to lend money through the SBA 504 Loan Program. The money can be used for many different capital investments like purchasing building or equipment. The goal of the 504 program is to increase jobs, business expansion, and increasing the tax base. The CDC is experienced at lending and helping the small business through the loan process. With this experience the CDC needs to be directly involved in any Presidential Small Business Plan. The other SBA secret program is the Microloan.
Small business can take advantage of collateral backed, small loans, like the Microloan
Many businesses that need small (currently under $35,000 and could be up to $50,000 if congress passes legislation) short term funding could use the SBA Microloan program. This program uses designated intermediary lenders to finance the program. Obama’s Small Business Plan needs to entertain the SBA Microloan program. Many small businesses do not need large amounts of money to grow and create jobs. A florist that would like to add a new display case or a carpet cleaner that needs a portable cleaning machine would be the perfect candidate for a Microloan. The kind of enterprises that are in every small community across the U.S. and are in need of small short term loans for growth.
Rep. Nydia M. Velázquez (D-N.Y.), chairwoman of the House Committee on Small Business, say that the SBA (Small Business Administration) would be best equipped to lend the money directly to small business owners. Both republicans and democrats will be debating the Presidents Small Business Plan in the months to come.
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And this year alone Sallie Mae has spent over 8 million in lobbying costs to prevent the government take over of the industry. That fact alone tells us a lot.
These SBA loans are virtually the only way the average individual can purchase a business or buy a building for a new business start up.
Many times having the new growth of the business tied to such a small amount ($35,000) forces a mindset that focuses on the essentials and that efficiency from the beginning ends up working out better for the business than a huge loan with lots of ‘fat’.
over 8 million in lobbying costs to prevent the government take over of the industry. That fact alone tells us a lot. this is bad
Thank you for this post, This is such a great news for small businesses to start up and increasing job opportunities which we really need.
These SBA loans will definitely motivate an average individual to purchase a business or buy a building for a new business start up. It will also bring boom in employment sector and for sure will increase no. of jobs in a market.
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