Near the end of September 2010, President Barack Obama signed a Small Business Bill into effect. The new bill set aside $30 billion for small business lending. The law also includes $12 billion in tax breaks for small companies. This bill was signed into effect as a response to the 9.6 unemployment dissent in America. President Obama and the administration signed the bill to demonstrate an effort to decrease the unemployment levels in the United States. President Obama hopes that the loan will create as many as 500,000 new jobs within the next couple of years.
Small Business Jobs Act 2010 Changes
The Small Business Jobs Act includes the Recovery Act Loans Extension that provides $14 billion in lending support. Small Business Administration (SBA) Recovery loans will be extended under the law with a 90% guarantee and reduced fees. At the time that the bill was signed, 1,400 small businesses were waiting for funding. Since the signing of the Recovery Act, 70,000 Recovery loans have been supported. Over $680 million dollars have created $30 billion in lending support.
The bill supports higher loan limits, and the maximum loan sizes increased in the pre-established loan programs. The new bill also increases the 7(a) and 504 loan limits from $2 million to $5 million. Manufacturers may receive up to $5.5 million. The 7(a) loan program is one of the most flexible loan programs offered for start ups and existing small businesses. Most of these loans are gained through commercial lending institutions. The 7(a) loan program includes an Export Loan program and a Rural Lender Advantage program. Some businesses will be able to refinance and incorporate their commercial real estate mortgages into the 504 loan program. However, this only applies to owner occupied units.
Microloan limits increased from $35,000 to $50,000. These loans are designed to help entrepreneurs with large start-up companies and small businesses owners in underserved communities. The new bill also increases small business eligibility for SBA loans. They make this possible by increasing the “alternate size standard” to small businesses with less than $15 million in net worth. This also applies to those businesses with less than $5 million in average net income. The law also increases the amount of Small Business Administration (SBA) Express loans from $350,000 to $1 million. Working Capital and Commercial Real Estate Refinancing received temporary enhancements to assist small business owners.
The tax cuts include the following:
- More Deductions for Start Ups
- Deductions for Cell Phones provided by the Employer
- Self Employed Health Insurance Deductions
- Penalty limitations for small business tax reporting errors
- Accelerated or Bonus Depreciation
- Provisions for up to Five Years of Net Operating Losses
- Up to $500,000 for Small Business Expenses: The Highest Expense Ever
Fees Associated with the SBA Loans
Fees are assessed to offset the costs of the SBA loan to the taxpayer. Lenders are charged a guaranty fee and servicing fee for each approved loan loan. The fees are a percentage of the amount loaned to the borrower. The lender may charge the guaranty fee upfront. However, the borrower is not responsible for the lender’s annual fee.
ARC Loans are small business loans that do not carry any associated fees. In the past, the fees for loans were between 1% and 3.5% of the total cost of the loan. ARC loans offer 100% guaranty from the SBA to the lender. No fees are required to be paid to SBA. Many of these loans are provided over a six month period. The repayment of the principal of the loan may be deferred for 12 months after the final disbursement of the loan. Repayment may last as long as five years. The best candidates for this type of loan are companies that have been profitable in the past, but are currently struggling. These companies may have begun to miss payments recently because of financial hardship. These funds may be used to make payroll, buy inventory or improve core operations.
Lenders will be charged an annual fee of 0.55 percent of the guaranteed portion of 7(a) loan. The fee will only be assessed to the balance of the loan and not the entire loan amount.
Borrowers will pay an annual fee of 0.749 percent on the outstanding balance of the 504 loan. This amount increased from 0.389 percent. Loan interest rates may not exceed 4.75% and may be as little as 2.25% when negotiated through a bank.
How Long is the SBA Loan Process?
Since the Small Business Administration is a guarantor and not a lender, the amount of time required to approve the loan will vary. The Small Business Administration attempts to reach its decision within seven to 21 business days from the receipt of the application. To accelerate the process, applicants should have several components of their application in place.
The length of time it takes for the SBA to respond to the application depends on the loan program your business elects to apply to. A business plan with financial statements is required for all loan programs. Earnings projections and collateral offerings must be established. In general, the SBA microloan is the least time consuming application and will be approved the fastest. The maximum loan amount was increased to $50,000. The funds cannot be used to buy property or pay debt.
Top Five SBA Loan Lenders
The banks have sorted SBA lending by region. Some of the most prominent banks involved in lending are the following:
Wells Fargo Bank
Wells Fargo managed a No. 1 ranking between October 1, 2009 and September 30, 2010 for the Small Business Administration 7(a) loan. The bank issued 91 SBA loans with a total value of $31.9 million. The bank was the second leader in terms of ARC loans. The bank issued 23 loans for a combined value $710,100.
JPMorgan Chase Bank
Chase Bank issued 33 ARC loans with a total value of $935,100. They ranked No. 1 in this category of loans issued.
Mortgage Capital Development Corporation
This particular bank issued the most 504 SBA loans. Businesses may use these loans for real estate purchases, property constructions and upgrades.
This bank issued 71 SBA loans for a combined value of $54.1 million. Nearly, 56 of these loans were 504 loans. The loans had a total combined value of $48.9 million.
Capital Access Group
Capital Access Group issued 51, 504 loans for combined value of $37 million.
Rates of Top Five SBA Loan Lenders
Typically, 3.5% of the SBA amount is due at the time of the loan. However, the fee may be financed. An origination fee may include bank fees. A fixed or variable interest rate will be negotiated by the bank for the Wells Fargo portion of the loan.
A guaranty fee of 1% to 3.5% of the guaranteed amount must be paid by the lenders. The lender must also pay the annual fees of 0.25%. The lender may pass the guaranty fees onto the lender, but not the annual fees.
Mortgage Capital Development Corporation
This bank charges 0.389% of the balance of the loan for fees.
Most 504 loan programs will pay up to 90%. Therefore, most borrowers only have to make a 10% down payment. This bank offers a 4.39% interest rate to those seeking a loan. The fees are typically 1% or less.
Capital Access Group
Businesses may get up to 90% financing with a SBA loan. The interest rates are 4.40%. The fees are typically 1% or less.
Many US citizens are hopeful the economy will recover and become more stable beneath the new government. Business entrepreneurs are positive that this is actually the entire year that things could possibly get better and although financing a business remains to become large challenge, small company proprietors are depending on banks and lending companies for support.
Take a look at the few suggestions here for business entrepreneurs that are planning to get a business loan:
Have a look at Small company administration mortgage programs. The Small company administration (Business Administration) offers special mortgage programs for more compact companies within the U.S. states together with the American Recovery and Reinvestment Act (ARRA) passed, this might be time to submit an application for a Small company administration loan. For instance, the 504 loan program covers a range of assistance for instance start-up costs, equipment, stocks and supplies, together with other business expenses.
The Small company administration does not directly give you the funds however we have an assurance for qualified more compact companies. You must have a chance to enjoy more flexible terms and quick approval just in case the application is backed-up with the Small company administration.
Look for lending companies and lenders that are accredited with the Small company administration and check into available Small company administration mortgage programs. Lenders usually give a reduced interest rate on financial loans compared to commercial lending companies so make certain to consider this method.
Gather all necessary documents. Uncover the specific documents that you will want to submit along with your business application for that loans. Generally, this list of necessary documents includes financial sheets and business tax claims throughout the final 2 to 3 years personal finance sheets and tax statements in the company owner throughout the final 2 to 3 years business license and permits business summary as well as the proper strategic business plan.
Practice reacting to interview questions. Before winding up inside a possible loan officer for your interview, it’s vital that you prepare yourself also to build-your confidence in reacting to questions. Anticipate possible questions and use your response.
For example, a prospective loan company may request everything you can do while using funds must have an agreement. Make sure that you’ll embellish particulars to ensure that they are able to construct your application look wonderful. It’s crucial that you give a positive answer also to explain your plans with conviction. Just in case your interviewer notices that you are uncertain along with your responses or you don’t truly come with an absolute plan, it might send the sense that you are unable to determining your personal business.
Seek professional advice. Where can home based business entrepreneurs get professional advice specifically if this involves acquiring business financing? You may request the Small company administration or possibly small businesses Development Center (SBDC) in your town to acquire assistance totally free. In a few SBDC offices, you may also be capable of take advantage of the computer workstation totally free to conduct general market trends.
The Small Business Administration(SBA) was established in 1953. Since that time the agency has dispensed huge amounts of money in loans and loan guarantees, contracts, consulting assistance and other programs for business across the United States.
The seeds of the formation of the SBA were sown within the challenges of the Great Depression and World War I and grew due to numerous predecessor organizations.
Earlier Small Business Administration Agencies
In 1932 Herbert Hoover instituted the Reconstruction Finance Corporation. The agency sought to ameliorate the consequences of the Great Depression.It sought to achieve this through the establishment of a loan program to support businesses adversely effected by the Great Depression. It had been adopted as the personal project of Hoover’s successor, President Franklin D. Roosevelt.
The need to assist small business intensified with the onset of World War II, when they were placed at a competitive disadvantage vis-a-vis larger concerns. The Smaller War Plants Corporation was formed in 1942 to help with minor businesses, enhance their financial strength and enable them to more fully take part in the war effort. The Smaller War Plants Corporation accomplished this through providing loans directly to private entrepreneurs, providing incentives to large financial institutions to increase lending to small enterprises and acting as an advocate for small business in the federal procurement process.
After the war the SWPC was absorbed into the Reconstruction Finance Corporation. In addition to the services offered by the RFC the Commerce Department also had an Office of Small Business. The charter of the Office of Small Business was primarily educational, predicated on the stance that the lack of success of many business was insufficient access to information of operating a business and business skills. The Office focused its offerings on pamphlets and management consulting to individual entrepreneurs.
Through the Korean War the Congress created yet one more agency focusing on small business, the Small Defense Plants Administration. It carried a portfolio just like its predecessor Smaller War Plants Corporation with the exception that small business lending authority remained with the Reconstruction Finance Corporation. The Small Defense Plants Administration performed initial screening and provided counseling services to small businesses and provided certification that they were qualified to receive government contracts. The businesses then entered the loan process of the Reconstruction Finance Corporation.
The Founding of SBA
To streamline government support for minor business President Eisenhower proposed the organization of the Small Business Administration and it was developed by Congress in July 1953.” The charter also stipulated that SBA would ensure minor businesses a “fair proportion” of government contracts and sales of surplus property.
Initially the SBA concentrated on providing direct loans to small businesses, guaranteeing bank loans and making loans to victims of natural disasters. The Administration also provided help to small businesses to obtain government contracts and provided management consulting and technical assistance.
The Investment Company Act of 1958 established the Small Business Investment Company (SBIC) Program, under which SBA licensed, regulated and helped provide funds for privately operated and operated venture capital investment firms. They specialized in providing long-term debt and equity investments to high-risk minor businesses. Its creation emerged as the result of a Federal Reserve study that discovered, in the basic form, that these businesses cannot get the credit they needed to keep pace with technological advancement.
In 1964 the SBA expanded its portfolio to join the War on Poverty, with the Equal Opportunity Loan Program (EOL). The Equal Opportunity Loan Program presented citizens living below the poverty level with the chance to receive credit with reduced collateral and application requirements. This enabled businesses with sound employment opportunities to obtain the financing that they needed to pursue them.
The breadth and scope of programs offered by the SBA has never been more extensive than it is today. The SBA helps and is an advocate for all U.S. businesses in every enterprise category and every State and Territory. Whether its providing procurement assistance for federal contracts, management consulting, or outreach to women, minorities and veterans, the SBA is an able partner. SBA also provides loans to victims of disasters and specialized advice and assistance in international trade.
If your car insurance is due for renewal and you are considering buying another policy then this article will provide you with important facts that you should know about. Car insurance policies are getting increasingly expensive and you should do all that you can to reduce your costs. How much you have to pay for your car insurance is dictated by a variety of factors as they apply to you and your vehicle.
In this article we will examine coverage limits, your age, gender and marital status, your location and insuring other household members. All of these factors will have a great influence on how much you will have to pay for your policy.
Coverage limits are generally dictated by the price that you are willing to pay for your insurance. A higher level of coverage will generally result in higher premiums. The best way to find a good value policy is to comparison shop. Nowadays it is generally accepted that the best way to do this is by using a car insurance comparison website.
Your age, gender and marital status will have a great effect on the auto insurance rates that you are offered. Insurers rate drivers using a variety of criteria, if you are a young single male driver you will usually have to pay higher rates. If you are a middle-aged female married driver then your rates will be lower. Insurers calculate the best car insurance rates for you by comparing levels of risk. Those groups which are statistically more likely to be involved in an accident have to pay correspondingly higher rates.
Location plays an important part in deciding how much your premiums will cost. Drivers who live in an urban environment will usually pay more than those from a rural area. This is because drivers who live in cities and heavily populated areas are more likely to be involved in an accident, or to have their car stolen or vandalized. Insurers generally offer better rates if you’re able to demonstrate that you keep your vehicle in a garage at night. You may also be able to improve the security arrangements of your automobile by fitting an alarm, immobilizer and steering wheel lock.
Insuring other household members will have an influence on the cost of your policy and the best car insurance rates that you offered. If you have teenage family members living with you and they are added to your policy, then your costs will increase. This may still work out cheaper than if your teenage driver were to have a separate policy in their own name.
In conclusion, there are a variety of different factors which can affect your ability to be offered the best insurance rates. Some of these are coverage limits, how old you are, whether you are male or female and whether you are married or single. Your rates will also be affected by the area where you live and whether other household members are included in your policy.