More express loans are available in region
A small but important small-business lending window is squeaking open, and you need to know about it.
In previous columns I wrote that the U.S. Small Business Administration put its clamps on the community express pilot program for small, working capital loans. The agency restricted most lenders to a small percentage of their overall SBA lending. It resulted in shutting down the program for Southwest Florida.
"Demand for community express financing continues to increase, however with the rationing now in place, qualified small business applicants who fuel the nation's economy are being turned away," Tim Jochner wrote on his Web site, superiorfg.com. He is the CEO of Superior Financial Group, a Walnut Creek, Calif.-based lender that made thousands of loans nationwide.
In addition to SFG, Borrego Springs Bank and Innovative Bank are two other California lenders that are active in our area. Check out their lending programs online at b-s-b.net and innovativebank.com.
The community express program allows lenders to use minimal documentation and a cookie-cutter approach to underwriting. It provides a way to pump a quick infusion of money into existing and start-up businesses. Borrowers submit a brief application with a few supporting documents, and they can be approved in a few days.
SBA limits these loans to $250,000. However the three California-based lenders keep their loan amounts in the $5,000 to $50,000 range. Their underwriting relies heavily on credit scoring and the applicants' personal ability to pay the proposed debt. No collateral is required.
The good news is that the federal government's new fiscal year began on Oct. 1 and SBA is allowing more loans to be funded. The quotas for each community express lender has been increased to 100 loans per month, nationwide. Additionally the lenders are pressuring SBA, Congress and the Bush Administration to make the program permanent. It would remove the quotas.
Until that happens, the lenders are using SBA's other programs to approve more community express applicants.
"Our cap on the number of community express Loans was raised from 10 loans per month to 100 loans per month," Terry Crispen told me. He is the executive vice president of Borrego Bank and says that they have added two more SBA programs to its menu. They are "the patriot express loan program which is for veterans and the spouses of veterans as well as a standard 7(a) PLP working capital loan program"
SFG is also using these two programs to accommodate more applicants.
Innovative Bank had a recent personnel shift and its SBA lending programs outside of California are being formulated.
If $50,000 or less can help your business succeed, SBA's community express program is worth considering.
Source:http://www.heraldtribune.com/article/20081020
