Many More Small Businesses Now Eligible for Long-Term Financing With SBA 504 Loans

/PRNewswire/ -- A number of very substantial benefits for America's small businesses were incorporated into the Small Business Jobs and Credit Act of 2010, recently passed in Congress. Included in the legislation were major enhancements to the SBA 504 loan program, an important U.S. Small Business Administration financing program. SBA 504 loans are long-term, government-guaranteed loans designed for small businesses to finance the purchase, construction or renovation of commercial real estate and the purchase of long-term capital assets.

As a result of the legislation, many more small business owners across the country now qualify to receive SBA 504 loans. The net worth for companies to be eligible for an SBA 504 loan was increased, maximum loan size was raised and refinancing of existing debt was also approved.

Among the most important benefits included in the Small Business Jobs and Credit Act of 2010 is an extension of the fee relief for SBA 504 loans. This fee waiver was first enacted in February 2009 as part of the American Recovery and Reinvestment Recovery Act. An additional $505 million has been allocated to fund SBA loan fees through December 31, 2010 saving borrowers many thousands of dollars.

Maximum loan amounts were also permanently increased to a range of $5 to $5.5 million from a previous maximum range of $1.5 to $4 million. Larger projects are now eligible for 504 loans and borrowers who already have loans with the SBA can now return for additional funding.

There was also an increase in the business size standard to be eligible for an SBA 504 loan. Businesses with a tangible net worth of $15 million and 2-year average net income after Federal income tax of $5 million, are now be eligible to apply for SBA 504 financing opening the door to many more small business owners across the country.

Perhaps one of the most beneficial enhancements to the SBA 504 loan program is a temporary two-year program for refinancing existing small business commercial debt. Small business owners holding commercial real-estate loans with undesirable rates will have the opportunity to refinance these loans using the SBA 504 loan program. This will be a boon for small businesses that are having difficulty keeping current on existing high-interest loans since SBA 504 loans are currently available at extremely attractive interest rates. Businesses will be able to remain in their facilities while lenders are not left holding vacant real estate.

SBA 504 loans are typically used by small businesses needing more operating space or by businesses that have lost their leases and decide to invest in their own facilities. Still others want to construct or retrofit facilities to incorporate energy efficient technologies to decrease operating expenses. Businesses needing to invest in capital-intensive equipment and machinery also look to the SBA 504 loan for funding. Small business owners definitely see the advantage of the low down payment which is typically only 10%. The hidden value to our economy is that all SBA 504 loan recipients are also adding jobs in their communities.

Certified Development Companies, or CDCs, are the SBA's conduit for providing 504 loans on Main Street. They are ready and waiting for the anticipated increase in demand this new legislation will generate. CDCs know that many small business borrowers will want to take advantage of these long-term, fixed, low interest rate loans now. Chris Crawford, President of NADCO, the trade association for the nation's CDCs pointed out, "The bottom line is that more small businesses now have an opportunity to invest in their own facilities or expand existing facilities using SBA 504 financing. At a time when the commercial real estate market is depressed and property is more affordable, this is great news for many small business owners."

Since 1986 the Certified Development Company industry has provided nearly $60 billion worth of financing to over 123,700 American small businesses resulting in the creation or retention of over 2.2 million jobs. Contact a Certified Development Company to discuss the program or visit the NADCO website at www.nadco.org for additional information.

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GSU unveils small business tax credit calculator for health reform

Georgia State University researchers have unveiled a small business tax credit calculator to help employers crunch the numbers to see if they’re eligible for health reform credits under the new law.

The tool, called the 50-State Health Reform Calculator for Small Businesses, will help small employers, including non-profits, determine if they’re eligible for tax subsidies to cover part of the cost of health insurance starting this year. It is the first comprehensive nationwide calculator for all states. It can be accessed at www.gsu.edu/ghpc.

“We’re trying to provide information for employers about the impact and effects of health reform on their business decisions,” said Bill Custer, associate professor and director of the Institute of Health Administration in the J. Mack Robinson College of Business.

Small businesses, or employers with fewer than 25 full time employees making less than $50,000, may be eligible for tax credits to help cover the cost of insurance starting this year.

Incentives are being offered because as premiums have increased, the number of workers with employer-sponsored health coverage has declined.

Custer, with associate professor Patricia Ketsche, also of the Institute of Health Administration, developed the tool in collaboration with the Georgia Health Policy Center in the Andrew Young School of Policy Studies, the Florida Public Health Institute and the Center for Mississippi Health Policy.

The Georgia Health Policy Center has spearheaded a collaborative effort to break down the complexities of the nation’s health reform law through a series of policy briefs. The latest is “Health Reform Implications for Employers,” which was released last week (http://bit.ly/9u3z4q).

Other topics have included state and community implications and the impact to health care providers. Many states have come to the center to request a breakdown of health reform and its impact in their localities.

The calculator is the latest tool being offered in a series intended to help consumers, employers, providers and policy makers understand health reform.

“This has been a great opportunity to not only partner across Georgia State University, but with other states, to bring relevant information about health reform to those who will be impacted by the law,” said Karen Minyard, executive director of the Georgia Health Policy Center. “Our group’s goal from the beginning has been to interpret, share, and apply what is learned to real world situations.”

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New National Guide for Donors Recognizes CCCS of Greater Atlanta as Foreclosure Prevention Leader

/PRNewswire/ -- In a newly-released national guide that identifies nonprofit organizations making the greatest difference helping people suffering in the current economic crisis, Consumer Credit Counseling Service (CCCS) of Greater Atlanta has been cited as a nationally recognized leader in effective housing counseling.

The Center for High Impact Philanthropy at the University of Pennsylvania recently published the guide, called "High Impact Philanthropy in the Downturn." The guide targets nonprofits that are preventing foreclosures, sustaining primary and preventive health programs and ensuring access to food. It provides descriptions of high-impact models for donors to fund, "cost per impact" estimates for each philanthropic opportunity, tips on finding and assessing local agencies and contact information for leading nonprofits.

CCCS of Greater Atlanta was cited as a "Model in Practice" for effective foreclosure prevention counseling in the investment guide. The guide says the nonprofit agency's low "cost per impact" is a major reason it is a model in foreclosure prevention counseling.

"The purpose of the guide was to identify where philanthropic capital could make a meaningful difference addressing the suffering caused by the current economic downturn," explained Katherina Rosqueta, executive director, Center for High Impact Philanthropy. "For donors focused on maximizing the social impact of their gifts, CCCS of Greater Atlanta's work represents great bang for the philanthropic buck."

In recognizing the Atlanta-based nonprofit, the guide says: "We estimate that it costs CCCS of Atlanta approximately $300 to keep one client in his or her home and avoid foreclosure activity for a year. By comparison, industry wide, the cost ranges from $500 to $3,800, based on the complexity of the issue."

The guide attributes several factors to CCCS of Greater Atlanta's strong "cost-per-impact" profile, such as its 45 years of experience working with people in financial distress; its strong commitment to data-driven decisions and investments in data management systems and its strong, professional culture that is reflected in its working relationships with mortgage servicers.

Suzanne Boas, president of CCCS of Greater Atlanta, said the agency is honored to be recognized by The Center for High Impact Philanthropy and hopes more homeowners will contact the agency to receive help to avoid foreclosure.

"We hope homeowners falling behind on their mortgage payments will not hesitate to call us to receive professional counseling at no cost," said Boas. "We realize that each and every homeowner is going through a difficult economic period and one of our housing counselors can help them understand all of their options, including how to avoid foreclosure."

In 2008, CCCS of Greater Atlanta answered more than 175,000 telephone calls from homeowners seeking to avoid foreclosure and provided foreclosure prevention counseling to more than 73,000 homeowners. This year, the agency anticipates that it will be provide foreclosure prevention counseling to more than 90,000 homeowners across the nation.

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NADA Statement on GMAC's Announcement to Expand Retail Auto Financing

/PRNewswire-USNewswire/ -- The National Automobile Dealers Association (NADA) says the actions of the federal government to support GMAC Financial Services will bring stability to consumer and dealer lending and help restore consumer confidence on Main Street.

"Credit is the lifeblood of the auto industry, both for consumers at the retail level and dealers at the wholesale level," says Annette Sykora, NADA chairman and owner of two domestic-brand dealerships near Lubbock, Texas. "Lowering minimum credit scores from 700 to 621 will expand credit availability to thousands of potential car buyers and further increase consumer confidence at this critical time in the auto industry."

GMAC's application to become a bank holding company was approved by the Federal Reserve Board of Governors on Dec. 24. The company received a $6 billion aid package from the U.S. Treasury Department as part of the Troubled Assets Relief Program.

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Federal Reserve Approves NADA-Backed Initiative Aimed at Increasing Inventory Financing

/PRNewswire-USNewswire/ -- Following President Bush's announcement Friday to provide $17.4 billion in bridge loans to General Motors and Chrysler, the Federal Reserve Board, in a related action, addressed a key request from the National Automobile Dealers Association by including floorplan securitizations in a new $200 billion credit facility the Federal Reserve is establishing.

The Federal Reserve on Friday clarified the eligibility requirements under the new Term Asset-Backed Securities Loan Facility (TALF) and, in doing so, for the first time included loans for dealer inventory financing as a qualifying asset class.

"This move meets a key need that NADA had identified for greater liquidity in the auto retailing marketplace," said Andy Koblenz, NADA vice president of legal and regulatory affairs.

The U.S. Department of the Treasury announced Nov. 25 that the Fed would be establishing the TALF credit facility, a $200 billion program designed to facilitate the issuance and sale of securitized auto loans. However, at the time the TALF was announced, it was unclear whether it would include loans for dealers at the wholesale level. That uncertainty has now been resolved.

In addition to confirming the eligibility of floorplans loans, the Federal Reserve also extended the term of TALF loans from one to three years and provided that TALF loans could have fixed or floating interest rates. These changes will make it easier for auto finance companies to use the TALF to issue floorplan securitizations.

"NADA's goal all along was to restore liquidity in the credit markets for all dealers and their customers," Koblenz added. "By working with the Federal Reserve and the Department of Treasury to ensure that floorplanning loans were included, NADA was able to give creditors confidence to once again make loans available to dealers to finance the inventory on their lots. This will, in turn, help ensure that dealers have at their dealerships the selection of vehicles that consumers want to buy."

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