SBA Urges Banks to Offer Greater Loan Flexibility to Small Firms
The Small Business Administration today urged banks to offer more flexibility to small firms interested in a special long-term loan program as entrepreneurs and established small business owners find it difficult to succeed as sources of credit like home equity loans diminish. As traditional bank lending tightens in the nation’s current economic turmoil, many small firms have been turning to resources offered by the federal government such as the 7(a) loan program, which provides long-term loans for small businesses. Most U.S. banks participate in the program and must structure these loans according to the SBA’s requirements. Both the lender and the SBA share the risk that a borrower might not be able to completely repay the loan. But the program is troubled. It has seen four consecutive fee increases since 2005. For small and mid-sized loans, the fees were doubled to $3,000, and for larger loans the fee can hit
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