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2008 has been a very tricky year for all involved in the commercial mortgage business and SBA commercial loans are no exception, to the surprise of many. Numbers are down across the board and some estimates are coming in that the SBA 7a program (the most popular) will have closed roughly half of what they did in 2007, in terms of loan volume. Number of closed loans is also way down.

Many industry players have been really shocked by this outcome. After all, the government set the program up in an effort to help stimulate the economy and many players where betting that the SBA loans would be relatively stable and undamaged.

There’s seems to be a couple of key issues here that have slowed closings besides the obvious liquidity problems. For one and this is no surprise, both the SBA 504 and the 7a are expensive compared to conventional loans. From the broker’s perspective, selling the 2.75% SBA guarantee fee on the 7a program is no easy task. And it doesn’t matter to a lot of borrowers, especially those that are use to more competitive conventional loans, that the fee is rolled into the loan amount. Or that this might be their only real option.

Also, the quarterly adjustable rate is scaring some borrowers away as they contemplate what and where Prime might be going. We’ve had many borrowers talk about the Jimmy Carter days when Prime was in the 20%. So many borrowers are passing and just sitting on the sidelines waiting for conventional to come back. For example, we have several borrowers waiting that have hard money loans and would rather pay their double digit rates than refinance into an adjustable rate. The issue is that they don’t want to have to refinance again in a few years and pay for the third party costs again. Of course this assumes that conventional loans will be back.

Another issue has been that the SBA recently rewrote their 800 page manual and made it a more manageable 200 pages. A great effort for more simplicity and efficiencies have unfortunately caused a lot of confusion as many underwriters have been left with unanswered questions about what the new guidelines are, exactly. This confusion and doubt has been an incentive for some banks to pass on the SBA programs. Unfortunately the timing on this couldn’t have been worse.

What are the liquidity issues? As many readers are aware most banks that fund SBA loans do so with the intent of selling the debt off onto the commercial secondary market. Now that this market is so beat up and that there are few buyers, banks have to hold onto the debt on their balance sheet. For some banks this goes against their business model and for other it’s not even an option as they have their own liquidity issues. Many banks can’t or don’t want to be portfolio lenders.

However, despite the problems it is worth noting that the SBA loans are still standing and there are banks that are still closing loans with the SBA guarantees. While conventional is basically out completely for the time being. For example, try getting a car wash loan done right now without the SBA guarantee. Or a hotel loan or a restaurant loan. There are very few conventional loans out there that will even discuss a special purpose property with you if it’s not going through a government sponsored program.

Author: Jeff Rauth
Article Source: EzineArticles.com
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The government recently doled out $1 billion for the CARS (Car Allowance Rebate System) program that allows consumers to turn in their “clunkers,” cars that get 18 or less MPG (and meet other requirements), and a receive $3,500 or $4,500 discount on a new vehicle. Last week, the government decided to infuse an additional $2 billion into the program, which has already “…helped [automakers'] companies, suppliers, scrap yards, steel producers and other small businesses,” (Reuters).

Nevertheless, as the owner of a small business that doesn’t sell cars, you may be looking for your own cash infusion. Though there may not be a government-created program equivalent to cash for clunkers, designed to help other retail and/or service-oriented business owners, there is still a way for merchants to get funds for their businesses – merchant loans.

Merchant loans lenders offer various programs designed for small business owners located in both the United States and Canada. Starter merchant cash advance programs allow merchants who have been declined in the past to be advanced a small amount and a larger amount once the initial advance is repaid. The standard merchant loan program offers up to $500,000 to qualified small business owners, and the premium advance program provides the best rates and flexible loan terms for merchants who meet special qualifications.

Some merchant loan lenders even offer new restaurant loan programs, in which restaurant owners do not need to have a six-month track record in order to receive funds. Merchants who qualify for this program can get up to $500,000 for their restaurants within the first week of the restaurants’ openings.

Basic merchant loan requirements include:

· Merchant must have owned business for at least six months
· Business must process at least $3,500 in monthly credit card sales
· Business must have at least one year remaining on lease
· Merchant may not have unresolved bankruptcies

Get a free online quote today and find out how much money a merchant lender can infuse into your small business.

Author: Gaston Castro
Article Source: EzineArticles.com
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