Small Business Administration loan guarantees up to 90% and fees eliminated

As a business owner, you are probably well aware of the credit constraints that lenders have instituted in the last couple of years.  Are you also aware of the changes made to the SBA’s programs to encourage lenders to lend to qualified companies and qualified companies to pursue credit?  First to encourage lenders to use the programs to mitigate risks, the agency raised their guaranty to 90% on all programs except one until September 30, 2010.  Then to encourage companies to pursue credit if needed, the agency did away with all their fees associated with the guarantees.  These fees ranged from 2% to 3 3/4% or more and are currently being covered by the agency until funds run out which is expected to be sometime near the end of the calendar year in December.  As an example of the savings, a company borrowing $1,500,000.00 for expansion would save a guarantee fee of nearly $45,000.00 up front.

In addition, the agency instituted a new program called ARC, Americas Recovery Capital Loan Program.  While limited to a maximum of $35,000 to help weather the economic downturn, the lender receives a 100% guarantee from SBA and receives a current interest rate that is paid by SBA on behalf of the borrowing company who receives the loan with no interest costs and can have 12 months without payments.  For details, see www.sba.gov and look for information on the ARC program or call 1-866-947-8081.

If your company is involved in exporting, then there are 3 programs designed for exporters that could improve your cash flow and help you handle confirmed orders from overseas.  The Export Working Capital Program (EWCP) has a 90% guarantee to your lender for funds to be used to fill confirmed orders from out of the country.  This allows the lender to take the transaction itself as security without tying up the other assets of the company.  Both BB&T and SunTrust are preferred lenders under this program but any bank willing to learn the program can participate.

Export Express is for loans under $250,000 that can be used for any legitimate business purpose to help expand exports and lenders using the program use their own application forms and approve their own loans so it is extremely quick and easy. 

International Trade Loans are long-term fixed asset loans with up to a 25 year maturity and are under the 90% guarantee during the economic stimulus program with the fees waived.

In addition, SBA has several other domestic loan programs to help companies obtain credit from their lender and you can find information on those programs by again going to www.sba.gov and under Services click Financial Assistance.  You can find a 30 minute webinar on export financing at www.export-u.com where you will need to register but there is no cost involved.  Or if you have a specific interest you can contact the local SBA export representative in Atlanta, Ray Gibeau, at 404-897-6089 or raymond.gibeau@sba.gov.