Help for small businesses
A new program will help small businesses that are strapped for cash.
Thanks to one of the programs set up through the economic stimulus package, small businesses that are struggling will be able to get quick loans of up to $35,000 through the Small Business Association.
SBA prepares for quick loans
Congress has given the SBA only 15 days to issue guidelines for the brand new program, called the Business Stabilization Program.
The initiative is aimed at keeping more businesses from having to shut down. The economic stimulus package dedicates $255 million to quick, emergency loans for small businesses who are struggling with debt and bills.
A loan for a loan?
The new emergency loans will only be available to businesses that already have business loans. In fact, the loans can only be used to pay down interest and principal on other loans.
Timing is everything
These quick loans are designed to work somewhat like payday loans. They will help stabilize businesses in the short term by paying for balances that are due now and buying them more time.
Businesses don’t have to start paying back their emergency loans for a year, so it will help with bills that are due in the next six months. The full loan won’t need to be paid back for five years.
Special money
The interest on these loans will be subsidized by the SBA, although the loans won’t be given directly through the SBA. However, for the first time ever the SBA will offer banks that make the loans a 100 percent guarantee. So if businesses default on their quick loans, the SBA will pay back the banks for them.
How do we find a bank that will give us a sba stimulus loan?
Well, it’s good that they’re starting to give bailout funds to small businesses instead of giant multinationals that couldn’t manage to balance their own books. Obama did say that most of the stimulus funds that created jobs were going to be in the private sector, and hopefully he’ll stick to it.