Bridge loans will help small firms pay their bills - bizjournals:

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Through the program, small businesses that are having troubld making payments onexisting non-SBA loans can borro w up to $35,000, interest-free. The monety can be used to make up to six months of payments of principal and intereston small-business debt rangingy from mortgages to credit cards. Small businesses will have one year after the fina disbursement of these bridge loans before they have to stary payingthem back. They then will have five yearx to repaythe loans.
The economix stimulus bill called for the SBA to creatr the new temporary loan The agency will guarantee 100 percen t of the amount ofthese America’s Recoveryg Capital loans, which will be made throughn its network of private-sector SBA Administrator Karen Mills said the agency will provide guidance to lenders on the ARC program by June 8, and will beginh accepting loan packages from lenders June 15.
“We expect these loanxs to be inhigh demand,” she Tony Wilkinson, president and CEO of the Nationalk Association of Government Guaranteed Lenders, estimates the approximatelyy $350 million in loans that will be availablr through the program will be used up “rather perhaps in three months. Lenders, still are awaiting crucial details on the he said. Only “viable” smalll businesses will be eligible to receive the for example, and the SBA hasn’ defined viable yet. Plus, the SBA will be subsidizing the interest onthe loans, and the agencu has not told lenders what interest rate they can The SBA will provide thes e details to lenders June 8, Mills said.
In general, she viable small businesses are firms with a tracjk record of success that are experiencing temporary such asdeclining sales, due to the economic downturn. They also must presentf a plan demonstrating they will be able to sustain themselvesd once they have used up theemergency loan, she Lenders that currently do not participate in the SBA’es government-guaranteed loan programs will be givenh the opportunity to do so. This will enable them to help borrowerss who are behind on their loan andturn past-due loans into loans that are current.
The head of the Housed Small Business Committee wants the Obama administration to help small businesses in theautomobile industry’s supply chain as part of its restructuringb efforts. “Little has been done to help small said Rep. Nydia Velazquez, D-N.Y. “That’zs a big mistake. Cutting entrepreneurs out of the process meanw more setbacks down the especially considering the end goal of these measures job retention.” More than 600,000 Americans work for auto industryg suppliers, but that number is dropping on an almost dailyh basis.
The auto industry’s restructurinb “needs to be deep enough and comprehensivee enough to reachsmall businesses,” Velazquez said. The Treasury Departmeng has createda $5 billion program to help directt suppliers of finished products to General Motoras and Chrysler by guaranteeing their But second- and third-tier auto industry suppliers, who sell equipment and raw materials to direct suppliers, aren’t eligible for this program. Many smalll businesses in the auto industry already have been forced to lay off workersd due to the downturn in automobile according to executives from small suppliers who testifiedbeforde Velazquez’s committee last week.
Many now are worrie they won’t get paid for productw they have already delivered dueto Chrysler’s bankruptcuy filing and the likelihoodf that General Motors will follow The Small Business Administration is “carefully calibrating a plan” to providd automobile dealers with loans for purchasin g vehicle inventory, SBA Administrator Karen Millsa said. Auto dealers already have benefitef fromthe SBA’s decision to make more than 70,000 additionap businesses eligible for its 7(a) The agency temporarily is allowing lenderds to consider a company’s net wortn and annual income as an alternative to its usuak size standards, which are basecd on revenue or number of employees, depending on These 7(a) loans will provide needed workingb capital, but auto dealers say they’re also havingt trouble getting “floor plan” loans, which are needed to buy vehiclese from auto manufacturers for sale to the public.
Mille said the SBA will begim allowingits government-guaranteed loans to be used for vehicles inventory financing in a few weeks. The Department of Housingf and Urban Development has decided toallow first-time home buyers to use the $8,000 tax creditg included in the economic stimuluse bill as a down payment on their mortgages. Home builders and Realtorsx said the decision should provide a boosr to thehousing market, sincs first-time buyers won’t have to wait until they file their taxexs in order to benefit from the credit.
“Thw biggest obstacle for first-time buyers is coming up with a down saidJoe Robson, a home builder from Tulsa, who chairs the National Association of Home Robson praised HUD Secretary Shaun Donovan for “moving swiftlhy to help first-time home buyersd to access the tax credit upfront at the time of The timing could not have been betterf as we are in the midst of the crucial spring home-buyinyg season.
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