News
Bill to Jump-Start Lending
September 28, 2010
| HR 5297 doesn't quite have the ring of "Obamacare" or "DREAM Act" but, it's still meaty legislation. President Obama signed it yesterday, and the small business specialists at SomerCor504 tell us the $30B Small Business Lending Fund (established by the bill) will provide cheap capital to community banks, encouraging lending to small businesses. | |||
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| SomerCor504's Gabe Beukinga and David Frank told us HR 5297 includes $505M for fee reduction. This will waive the majority of fees associated with the program through 2010 or until the fees are exhausted. It also (for the first time) allows small business owners to refinance the debt on commercial buildings and equipment via the 504 program. The max SBA loan has also been increased to $5M (or $5.5M for buildings meeting certain energy efficiency standards) from $1.5M to $2M, so SomerCor can provide financing on buildings costing as much as $15M, as long as they're at least 51% owner-occupied. David says he's already seen signs of life in the small business loan industry and expects these new regulations will encourage even more small businesses to buy their own buildings. | |||
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| SomerCor provides about $85M in loans per year now, but expects to be able to increase that 30% to 50% over the next year. Gabe says the 20-year fixed rate of about 4.75% and 90% LTV is a major draw for brokers looking to get their deals closed since very few banks are fixing rates that low. With financing from many other sources dried up, brokers are finding the 504 program a cheap financing option for clients. Gabe and David are anticipating many companies will also take advantage of the refinance option, which should save companies on interest expenses, hopefully leading to more jobs. |
