Changes in Washington, but still same old Small Business Administration
13 commentsOctober 21st, 2009 | 11:55 am
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October 21st, 2009 | 11:55 am
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So where will we be next?
October 21st, 2009 at 4:18 pm
Chris–your comments are spot on. I am not seeing any activity "on the street" which leads me to believe that a quantifiable number of businesses are willing or able to take advantage of SBA loans. The process is too cumbersome; the amounts involved (up to $35,000) are too small to be meaningful.
Just last week the 3Q 2009 commercial real estate stats came out, and the local market continues to trend downward with increased vacancies, decreased rental rates, more negative absorption. Tough, tough market right now….
October 21st, 2009 at 6:08 pm
I agree. I also think that the banks need educated. I have a SBA Asst. Director telling me what he will do for me but I can't get any bank to work with me. The bank would have a 90% guarantee, what more do they want. The banks either don't understand or don't want to understand the SBA programs.
You can look on the SBA websit and see how many loans were approved per month. With the number of small businesses, the loans numbers aren't there.
October 22nd, 2009 at 8:05 am
True, inadequate; but so far proposals are in for improvement including an increase to 50k. As I have said in my past postings, changing the status quo doesn't happen overnight, nor in many cases, 9 months.
October 22nd, 2009 at 8:12 am
Thank you. We really need to push for a refinance program—one that actually makes sense. I think this would have a huge impact on banks and open up lending.
October 22nd, 2009 at 8:14 am
The President was on today talking about stimulus money to be given to small business in the amount of loans. The loans will be up to $5,000,000.
Sounds great . Your thoughts?
October 22nd, 2009 at 8:25 am
i agree 100% . Our company is promoting SBA 504 for our lease clients.
October 22nd, 2009 at 8:27 am
I like your ideas. They made a lot of sense.
October 22nd, 2009 at 8:28 am
Good evening Mr.Hurn
Thank you for forwarding your blog to me. Since you wrote this piece in August I believe the situation has remained the same or perhaps gotten worse. Please let me know if there is any way I can have my opinion be heard.
October 22nd, 2009 at 8:29 am
The refinancing of existing debt with a 504 loan woould significantly increase 504 loan activity, but isn't the purpose job creation? I am sure refinancing would assist in the job retention aspect of the program.
In my opinion the real problem is the inconsistentcy of the Administration propaganda and the reality of how the various agencies are responding. FDIC is scrutinizing community banks more closely and changing their guidelines; the SBA is tightening up its credit standards all of this to the detriment of small business.
October 22nd, 2009 at 11:25 am
Thank you all for your comments.
Cindi – you've pointed out a fundamental problem with the President's approach to "getting SBA-backed capital flowing again," namely that only a certain portion of the nation's 9,000 banks will ever offer SBA lending. It takes a certain amount of specialized knowledge to provide them, and it isn't the easiest lending to "get right." Outreach and education by the SBA would help, but the SBA also has to reassure banks that their guarantees won't get pulled. There is deep suspicion there, among many in the banking world, that the SBA will "leave them hanging" – it has happened in the past. So, in short, throwing money at small banks who've never done an SBA loan or have done a limited number, poses another set of potential problems. We shouldn't just "throw money at the problem" – that rarely, if ever, works.
Braudis - In a "crisis situation," change NEEDS to happen more readily than 9 months. We can and should do better.
Cathi - Indeed it would. It's been something I've been advocating for over two years now.
Dr. Faison - Thanks for the email. Read the next blog post and you'll see. I'm on it . . . and there will be more shortly.
Maria - Posting here is always a way – you'd be surprised how many people read my blog. It's not the "best" method of distribution, but it's a start. Of course, the next step is to speak with you congressional representative.
Larry - I don't really disagree with you. In a crisis, we need to retain the jobs we have first, then we can focus on job creation. Allowing 504's to refinance embedded equity in commercial property (which many banks aren't interested in doing right now), for instance, would provide capital with which business owners could retain jobs and possibly start planning for future growth. To your second point: there is definitely a differing set of agendas that few people want to shed a light on - politicians (for all of their failings here) are generally on the side of the public in wanting to see Recovery; the regulators are in crisis mode and are over-reaching in their efforts to "save as many banks as possible" . . . NOT necessarily to "save" the economy. The problem is that these are at odds with one another. We need to save the banks that can be saved; let some fail (capitalism must destroy in order to create again); lessen (not increase) the burden on small business owners; and do all we can to get credit flowing again. It's not an easy task, but it IS one that we should be able to handle.
October 22nd, 2009 at 2:29 pm
I worked very hard to utilize the ARC loan program and to use this as a test to see what the respone would be. WOW, it was as I expected, nothing but promises, LOTS of forms, and at the end of the day ZERO results. Another government promise unfulfilled!
October 22nd, 2009 at 7:41 pm
How can we manage or help those commercial properties with a liability or mortgage debt higher than the actual property value? or
How can we provide a business loan for a company that is just making it?
We need partcipation from public entities with less cumbersome procedures and companies need to respond with better efficient and effective ways to succeed in business.
We need to take the experience of the ARC loan programs. There are too many forms and almost zero results.
October 23rd, 2009 at 12:26 pm
Chris the problem is banks are being told on one hand to loan money yet the Feds FDIC Occ are in the banks forcing them to move loans off their books in industries that have a high rate of failure. Lenders are being sent all types of mixed messages so they are exercising caution.