It's been frustrating watching large banks get bailout funds
without paying it forward by making small business loans. Banks rebuilt their own balance sheets and many made
acquisitions rather than making what they deemed to be risky loans into a deteriorating market.
This week the Obama administration has indicated that they intend
to rely heavily on the existing infrastructure of the Small Business Administration to get funds moving once again
through the banking system and into the hands of small business owners.
On Monday (3/09/09) White House officials indicated that that the
administration will launch a plan next week that will provide financing, liquidity and guarantees to open up small
business lending, which is correctly seen as a key element of economic recovery.
The Obama budget would authorize the SBA to support $28 billion in
lending guarantees for 2009. Additionally, $730 million from the stimulus plan is being used to reduce the fees
associated with securing a Small Business Administration Loans and to guarantee a greater proportion of some SBA
This is GREAT news for business owners and is perhaps the best
possible way to get the economy moving again. SBA Loan Programs such as the SBA 504 or SBA 7a programs have
functioned for years as efficient ways to get funds to qualified businesses in need. No business or individual can
(currently) be the recipient of more than $2 million in SBA backed loan proceeds, so the funds will be widely
disbursed rather than funneled to well-connected large businesses.
The small-business lending plan is part of a concerted effort by
the Obama administration to ensure that the new government programs aid Main Street as well as Wall Street, a
Treasury official said.
The way SBA loan programs work, a bank issues a conventional loan
for the first 50% of a property's value and the federal government guarantees any approved amounts above the 50%.
Borrowers are always required to have a 10% equity injection at a minimum. By lowering the risk to lending
institutions, these loan programs improve financial visibility and will get banks lending and business borrowing
SBA lending is an excellent way to spur the economy into an upward
economic trajectory once again. Small business is the undisputed engine of job growth and these programs get them
the funds they need to operate and expand their business.
SBA Loans are fully underwritten, so only qualified borrowers and
transactions make it through underwriting, but the loans offer the highest loan-to-values and the lowest rates
available on the market for borrowers.
Is Now a Good Time to Buy?
The current unstable commercial real estate market has brought
commercial property prices back into the good to excellent range. There is definitely a buyers market in commercial
property. Although no one knows where the "floor" will be for commercial real estate prices, this is a great
opportunity to benefit from the stimulus package and grab and make that purchase.
If you currently lease commercial property to run a professional
practice,retail store, funeral home, etc, you plan on being in business for at least the next 5 to 10 years,
The total cost of ownership is likely to be lower if you buy your
property than it will be to rent the property over the long term.
Ownership has many benefits. Any and all tenant improvements are
yours to keep, you can never lose your lease or be forced to vacate the property,you have more options when the
time comes to sell your business if you own the property, you can shelter income and enjoy tax benefits of
Best of all, you can use the recently improved SBA Loan Programs
purchase the property with as little as 10% cash into the transaction but enjoy 100% of any increase in the value
of the property over the years. Owning your place of business is a great idea and now is a fine time to
Professionals and business owners should use this window of
opportunity to purchase property before the fiscal stimulus really takes root and creates inflationary pressures on
commercial real estate values as well as rental values.
http://www.k2cFinance.com, provides dependable financing options for
business owners and investors looking to acquire or refinance commercial property. He
specializes in loans between $150,000 and $5 million and typically delivers higher loan
amounts and more flexible terms than most banks are willing to
Ken understands how important predictable cash
flow and properly structured financing are to the success of any project. His loans preserve
capital, maximize cash flow and move quickly, efficiently and confidently through the funding
Contact Ken for free input on any commercial real
estate transaction. He loves working with business owners, talking deals and connecting with
others interested in any aspect of commercial real estate.
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