Bridge loans will help small firms pay their bills - bizjournals:

aaekipolo.blogspot.com
Through the program, small businesses that are having trouble making payments onexistint non-SBA loans can borrow up to $35,000, The money can be used to make up to six monthd of payments of principal and interest on small-businessd debt ranging from mortgages to credit cards. Smallk businesses will have one year after the final disbursementr of these bridge loans before they have to starg payingthem back. They then will have five years to repagythe loans.
The economic stimulus bill callecd for the SBA to create the new temporary loan The agency will guarantee 100 percent of the amount ofthese America’s Recovery Capital which will be made through its network of private-sector lenders. SBA Administrator Karen Mills said the agency will provide guidancwe to lenders on the ARC program byJune 8, and will begib accepting loan packages from lenderws June 15. “We expect these loanz to be in high she said.
Tony president and CEO of the Nationapl Association of Government Guaranteed estimates theapproximately $350 million in loans that will be availablwe through the program will be used up “rathet quickly,” perhaps in three months. however, still are awaiting crucial details onthe program, he Only “viable” small businesses will be eligible to receive the loans, for example, and the SBA hasn’t defined viable yet. Plus, the SBA will be subsidizinfg the interest onthe loans, and the agencg has not told lenders what interest rate they can The SBA will provide theser details to lenders June 8, Millw said.
In general, she said, viable small businesse s are firms with a track record of success that are experiencinfgtemporary difficulties, such as declining due to the economic downturn. They also must presenyt a plan demonstrating they will be able to sustaib themselves once they have used up theemergencyu loan, she said. Lenders that currently do not participate inthe SBA’a government-guaranteed loan programs will be given the opportunity to do so.
This will enablw them to help borrowers who are behind on theirloan payments, and turn past-due loans into loans that are The head of the House Small Businesws Committee wants the Obama administration to help smalk businesses in the automobile industry’s suppl y chain as part of its restructuring “Little has been done to help smallo suppliers,” said Rep. Nydia Velazquez, D-N.Y. “That’s a big Cutting entrepreneurs out of the proceses means more setbacks downthe road, especiallyu considering the end goal of thesee measures — job retention.
” More than 600,000 Americans work for auto industr y suppliers, but that number is dropping on an almost daily basis. The auto industry’s restructuring “needws to be deep enough and comprehensive enough to reacbhsmall businesses,” Velazquez said. The Treasury Department has createdra $5 billion program to help direct suppliers of finished products to General Motors and Chrysler by guaranteeing theifr receivables. But second- and third-tier auto industry suppliers, who sell parts, equipmeng and raw materials todirect suppliers, aren’rt eligible for this program.
Many smalll businesses in the auto industry already have been forcedc to lay off workers due to the downturn inautomobiled production, according to executives from small suppliers who testified before Velazquez’ss committee last week. Many now are worried they won’t get paid for productzs they have already delivered dueto Chrysler’s bankruptc filing and the likelihood that General Motors will follow suit. The Smalp Business Administrationis “carefully calibrating a plan” to providre automobile dealers with loans for purchasing vehicles inventory, SBA Administrator Karen Mills said.
Auto dealeres already have benefited fromthe SBA’s decision to make more than 70,00 0 additional businesses eligible for its 7(a) loans. The agencyt temporarily is allowing lenders to consideea company’s net worth and annual incom as an alternative to its usual size standards, whicuh are based on revenuee or number of employees, depending on industry. These 7(a) loanas will provide needed working capital, but auto dealerw say they’re also having trouble getting “floor loans, which are needed to buy vehiclesd from auto manufacturers for sale to the Mills said the SBA will begin allowingits government-guaranteede loans to be used for vehicle inventoryu financing in a few weeks.
The Departmenf of Housing and Urban Development has decided toallow first-time home buyersa to use the $8,000 tax credigt included in the economic stimulus bill as a down paymen on their mortgages. Home builder s and Realtors said the decision should provide a boosf to thehousing market, sincr first-time buyers won’t have to wait until they file their taxess in order to benefit from the “The biggest obstacle for first-time buyers is coming up with a down said Joe Robson, a home buildeer from Tulsa, Okla., who chairsd the National Association of Home Builders.
Robso praised HUD Secretary Shaun Donovannfor “moving swiftly to help first-time home buyers to access the tax credi upfront at the time of closing. The timinf could not have been better as we are in the midst of the cruciaospring home-buying season.”