Wednesday, November 18, 2009

Some Relief for Small Business

After the near-collapse of the entire global banking system last fall (yes, it really was that close to the edge), many changes have occurred in the realm of finance, especially in the area of small business lines of credit. It's now tougher than ever for small businesses to get start-up loans, much less maintain adequate lines of credit with which to operate going concerns.

The big banks don't want to know about risky loans, since they almost went belly-up themselves just months ago because they took on more risk than they should have. Now, Citibank, JP Morgan Chase, Bank of America and Wells Fargo are still standing thanks to taxpayer-funded bailouts, but there are thousands of small businesses littered across the vast tapestry of the American financial landscape that are close to the edge or already insolvent due to the carnage from the economic tsunami.

Now that CIT, one of the large "factoring" lenders has fallen into bankruptcy, there is a need for more emergency loan lenders to handle the ongoing needs of American small business.

Many small business-people are looking forward to passage of the Business Emergency Loan Relief Act, recently introduced in the Senate by Ohio's Sherrod Brown, which would temporarily raise the SBA 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 bill was introduced by the Ohio Senator in an effort to ease some of the financial pain currently plaguing American small business.

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