hotdog cartThe number of Small Business Loans has increased substantially thanks to the government’s financial stimulus plans. Small business loans through SBA (Small Business Administration) are guarantying record numbers of loans to women, Hispanics, African-Americans and Asian Americans.

Small businesses make up the backbone of the American economy creating 65 percent of all new jobs in the country. The government understands that small businesses are the main engine of job growth and are critical to the financial recovery.

In the attempt to unfreezing the credit market so that more small businesses have the capital to expand and hire more workers, legislation has been introduced and is now pending that would temporarily raise the maximum loan amounts for the three main Small Business Administration (SBA) loan products: the 7(a) loan, the 504 loans and the America’s Recovery Capital (ARC) Loan Program.

The Small Business Emergency Loan Relief Act raises the 7(a) loan size from $2 million to $5 million, the 504 loan size from $1.5 million to $4 million, and the ARC loan size from $35,000 to $50,000. The bill also temporarily allows customers to use the 504 loan guarantees to refinance existing business debt, which would help small businesses address cash flow issues.

The 504 loan program uses nonprofit Community Development Corporations (CDCs) to provide long-term fixed-rate loans for assets such as land, structures and equipment that promote local economic development.

The ARC loan program, which was created through the American Recovery and Reinvestment Act of 2009 (ARRA), provides advances of up to $35,000, made by commercial lenders, to small businesses to make loan payments for up to six months.

7(a) loans are the most basic and most used type loan of SBA’s business loan programs. The program authorizes and guarantees loans made by SBA partners (banks and other financial institutions). Most American banks participate.

In the traditional 7(a) program, banks and other lenders approve loans and the SBA guarantees 50 percent to 85 percent of $150,000 or less and up to 75 percent of principal on loans of more than $150,000.

Typical Credit Requirements:

  • $150,000+ Minimum Annual Sales
  • Business in Operation for 2 Years or More
  • 680 MINIMUM Personal Credit Score
  • Personal Credit History Established for 3 years or More
  • Cannot be Overextended with Current Credit Obligations
  • Cannot Have an Excessive History of Late Payments
  • Cannot Have Outstanding Bankruptcies, Liens, Collections, Judgments, Charge-Offs or Repossessions

Financial contracts can be very confusing. Before signing yourself to a major long term commitment have an attorney, familiar with financing, small business loans, and taxes, examine and explain the details (where the Devil is). A good tax finance attorney can save you many times his fee over the years, not to mention possible legal problems.

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